Huge outlay, lack of industrial ecosystem to stymie Kerala’s own smart meter project

At least two years will be needed to set up the basic infrastructure for manufacturing the meters. To compound the situation, crores of rupees will have to be raised. Photo: Manorama

Thiruvananthapuram: The Kerala Government has decided to implement the smart meter project in its own limited way but the project is unlikely to take off anytime soon owing to the huge financial investments required and the lack of related industrial milieu.

The other day the State announced the plan to form a consortium of public sector establishments to manufacture smart meters. At least two years will be needed to set up the basic infrastructure for manufacturing the meters. To compound the situation, the crores of rupees needed for the purpose will have to be raised.

Very few companies in the country manufacture smart meters. In these circumstances, the Kerala Government faces heavy odds to turn the new venture into a success. Such a venture requires a long incubation period to establish the manufacturing ecology after acquiring the technology and obtaining the licence.

A high-level meeting chaired by Chief Minister Pinarayi Vijayan decided the other day to manufacture smart meters by forming a consortium of public sector establishments as a substitute for the Revamped Distribution Sector Scheme (RDSS) of the Union Government.

The deadline to install smart meters as per the RDSS is December 31, 2025. The Government of India scheme "aims to reduce the Aggregate Technical & Commercial (AT&C) losses" in power distribution "to pan-India levels of 12-15% and Average Cost of Supply (ACS)-Average Revenue Realised (ARR) gap to zero by 2024-25." States that implement the scheme will be extended a Rs 9,000 crore central grant.

However, in Kerala, the top ruling party, the Communist Party of India (Marxist), decided against implementing the scheme as it was against the TOTEX (total expenditure) model put forward by the Centre.

As per this key stipulation, the contracting company would install and maintain the meter at its own expense and recover the amount in instalments from the customers. The CPM completely rejected this model and forced the government to express dissent, though the latter was not totally against the project per se.

Kerala plans a truncated version

The Central scheme envisages installing smart meters for all the consumers, transformers, and feeder lines of the electricity board. This is part of the project for renovating the electricity distribution system under the RDSS. However, the decision of the Kerala Government is to install smart meters only for industrial and commercial consumers who number less than 3 lakh. With this decision, the RDSS can be implemented only partly in the State.

Central nod unlikely

The probability of the Centre granting approval to the project mooted by the Kerala Government is low. However, the Union Minister of Power New & Renewable Energy has assured the State that a project with an outlay of Rs 10,000 crore would be approved in addition to the Rs 4,000-crore scheme that was submitted in the first phase for the overhaul of the power distribution and supply sector.

The Centre has sanctioned a project costing Rs 10,475.03 crore under the first phase of the RDSS. Of this, the Central Government will give Rs 2,606.24 crore as its grant. The electricity board needs to spend only Rs 920 crore.

Out of the total outlay of Rs 10,475.03 crore, as approved by the Centre, the expenditure on smart meters is Rs 8,175.05 crore. Of this amount, the consumers must meet Rs 6,948.79 crore.

The money expended on the smart meters will be recovered in 93 monthly instalments from the consumers. The grant for smart meters under the RDSS is Rs 1,226.26 crore out of the total grant of Rs 2,606.24 crore.

Besides the smart meter scheme, the Kerala State Electricity Board (KSEB) had prepared projects costing Rs 13,126.53 crore for submitting them to the Centre.

If they are approved, then grants will be given for those projects too. However, if the present scheme goes haywire, approval for these projects cannot be expected.

Minister on scrapping of tender

State Electricity Minister K Krishnankutty, meanwhile, defended the decision to scrap the tender floated by the KSEB for the smart meter project.

The government had intervened to cancel after it was found that the scheme would impose a burden of at least Rs 80 per month on consumers if it was implemented under the TOTEX model as recommended by the Centre, he explained.

The KSEB has launched an initiative to formulate an alternative project in three months for executing the smart meter project without imposing any additional burden on the consumers, the Power Minister further said.

Significantly, Krishnankutty trashed reports that he had differences with the Chief Minister on the smart meter project.

KSEB's other roles

The KSEB staff would replace the old meters with smart meters, the Minister said.

The KSEB will develop the software for billing and related services. The fibre optic cable network that has been given free to the KSEB after the K-FON project went on stream, will be used to carry out communication. The KSEB’s data centre could be utilised to store data.

Power purchase tenders

Meanwhile, the tenders under short-term contracts for buying 200 MW of electricity will be opened on September 5. The tenders for buying 500 MW under a swapping agreement by which electricity that is bought now will have to be returned during the next monsoon season, will be opened on September 6 while the tenders for buying 500 MW of electricity on long-term contracts will be opened on September 4.

Load shedding in the State can be avoided only if electricity is available from outside. Even if the tenders are awarded, the State will begin receiving electricity only by October.

The KSEB has not considered increasing the power tariffs or imposing curbs on usage, the Minister clarified.

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