GEB needs additional fund to buy power

VADODARA: To meet the ever increasing demand of power from the farm sector, the cash-starved Gujarat Electricity Board (GEB) needs an additional fund of Rs 200 crore per month for buying costlier naphtha-generated power from independent power producers (IPPs).
GEB will have to buy 300 mw to 400 mw of power from these IPPs to meet the requirements of the sector.
But what worries GEB is the increase in financial burden due to the delay in the holding of Assembly polls in the state. Holding the polls early will be in the interest of the GEB as there will not be any pressure on it from the government to buy more power.
The tariff charged by Essar, an IPP, is higher than that charged by GIPCL, another IPP promoted by GEB and other state undertakings. Currently, only these two IPPs are in a position to sell power to GEB.
With the situation becoming alarming due to the failure of the second spell of rains in the state, the government has accorded top priority on supplying power to the farm sector without bothering about the cost of purchasing power from these IPPs.
The state''s farm sector is in dire need of power for meeting its irrigation requirements to save crops sown on about 65 lakh hectares of land. The present gap between the demand and supply of power is about 1,400 mw.
And with the Assembly polls just round the corner, the state government is left with no other option but to buy power from IPPs as GEB is not in a position to overdraw power from its counterparts in Maharashtra and Madhya Pradesh due to a similar situation on the power front prevailing in these states. But the main problem is that even the state government is in a tight financial position presently.
Electricity is provided to the farm sector at a heavily subsidised rate of less than 50 paise an unit, while the power generation cost works out to about Rs 2.50 per unit.
GEB''s financial position became weak after the Gujarat govt decided to square up Rs 4,000 crore of agriculture subsidy payable to GEB last year against loans for various projects. Prior to this, GEB used to get yearly agricultural subsidy that worked out to several hundred crores of rupees from the government.
Previously, the agricultural subsidy used to be about Rs 1,100 crore or even more. The GEB has been demanding that the subsidy be raised to Rs 2,200 crore as about 40 per cent of power generated in the state is used by the farm sector.
GEB''s financial position has been steadily declining despite good performance in power generation and revenue realisation compared to other state electricity boards.
Ever since the flat tariff for agricultural consumers was introduced, GEB''s revenue loss went up manifold. Besides this, the state government has been reducing plan allocation to GEB. Moreover, the borrowings from the market and government loans have a huge interest burden, which is evident from the GEB''s balance sheet for the last few years.