The KSEB had played the role of the victim to near perfection to get its power tariff hike proposals approved by the Electricity Regulatory Commission (ERC). It pleaded for an additional income of Rs 1,100 crore a year, and the ERC, as though touched, granted Rs 902 crore.
What the public sector company essentially told the Commission was that it had been doing well till July-August last year when the southwest monsoon unleashed havoc. Flood-induced losses were pegged at a whopping Rs 715 crore.
But what about the inefficiency that had wrecked the KSEB long before the floods struck? We are not speaking about the Rs 2,800 crore it has left uncollected from big public and private bodies. Nor are we dwelling on the burgeoning manpower costs that an Indian Institute of Management-study commissioned by the KSEB itself had asked it to cut down immediately.
What is more troubling is the power utility's shocking incapability to complete even small hydel projects on time. This inefficiency is highly problematic because the KSEB swears by hydel power.
Elastic hydel dreams
The 60 MW Pallivasal augmentation project, for instance, has been on for the last 13 years, and only 70 per cent of the project has been complete. The 40 MW Thottiyar project has been on for 11 years, and only 60 per cent has been complete. The 24 MW Bhoothathankettu project has been on for five years and nearly 40 per cent remains to be completed.
A minor project like the 3.5 MW Adyampara project had already taken 13 years and still mechanical and electrical works have not yet been done. The 3 MW Kakkayam project has been on for nearly seven years, and 15 per cent of the work remains to be completed. At least 13 small hydel projects had shot their deadline for commissioning by 5 to 13 years.
Despite the huge cost overruns and inordinate delays, the KSEB has not stopped pushing for hydel projects, including the 163-MW Athirappilly project. In fact, a part of the extra revenue the KSEB will extract now on from consumers will be pumped into four new hydel projects: Rs-88-cr Pazhassi Sagar project (7.5 MW), Rs-87-cr Peruvannamuzhi (6 MW), Rs-283-cr Chinnar project (24 MW), and Rs-78-cr Anakkayam project (7.5 MW). The Chalakkudy Puzha Protection Forum had questioned the hydrological data the KSEB had furnished in support of these projects at one of the ERC hearings.
Dams that bleed money
The seemingly unending delays are causing the kind of cost overruns a cash-starved public utility firm like KSEB cannot bear. For instance, the Pallivasal project began with an estimate of Rs 222.5 crore in 2007. As it stands, nearly Rs 500 crore has been spent. And the KSEB needs an additional Rs 250 crore, more than its original estimate, to complete the project. What began as a Rs-227-cr project has now swelled to a Rs-750-cr project.
The condition of the Pallivasal project is symptomatic of the KSEB's inability to finish projects on time. “The state-of-the-art machinery worth Rs 42.55 crore was imported but equipments worth Rs 7.5 crore alone was installed. The rest of the costly machinery now lie rusted at the project site. It cannot be salvaged,” said N S Alexander, former deputy drugs controller, who was perhaps the most vociferous critic of the KSEB during the pre-tariff hike public hearings held by the Electricity Regulatory Commission.
Ditto is the fate of the 24-MW Bhoothathankettu project. The original estimate was Rs 107 crore. Till now Rs 214.31 crore has been spent. Now, the KSEB needs another 107 crore to complete the project. The cost of a Rs-107-cr project has now escalated to Rs 321 crore. Since nearly 60 per cent of the work needs to be done, there is no guarantee that the cost would cap at Rs 321 crore.
For the 40 MW Thottiyar project, KSEB had already utilised Rs 62 crore. The initial estimate was Rs 144 crore. But the concessionaire, who had pocketed Rs 56.18 crore, has abandoned the project citing contractual violations. Even the KSEB is uncertain whether work on the project will resume.
KSEB's excuse
A top KSEB official conceded that there were inordinate delays. “It happens mainly because works are awarded even before land availability is ascertained and forest clearances are secured,” he said. Still, he said 90 per cent of the reasons for delay were beyond the control of KSEB.
When the ERC raised the issue of cost overruns, here is the official KSEB reply: “Economically viable projects in the state are limited and the projects in the state are delayed due to land availability and forest clearance issues, geological surprises, contractor related issues. These are not fully controllable by KSEB.”