Karnataka Power Corporation in financial crisis, has pending dues of Rs 21,963 crore

The Karnataka Power Corporation (KPC) has been hit by a crisis in power generation and maintenance due to non-payment of salaries and pensions of employees. Total outstanding dues by electricity distribution companies to power producers stays around Rs 21, 963.09 crore. 

The KPC is also facing financial difficulties for the implementation of Sharavathi Pumped Storage (2,500 MW capacity) and Varahi Pumped Storage (2,000 MW capacity). 

"The KPC is in a financial crisis. The power companies have to pay huge amounts of dues for the power that they have purchased from KPC and if this situation continues, there will be a severe financial crisis. Chief Minister Siddaramaiah, who is also the KPC chairman, has been requested to explain the situation and take some reform measures," said Subramani J., General Secretary, Karnataka Electricity Corporation, Federation of Statutory Societies, while speaking to Republic Network. 

KPC resorting to loans for expenses 

Karnataka Power Corporation has turned to loans as a result of the crisis to cover employee pay and service benefits, including maintenance. The loan amount is reportedly rising yearly. The corporation has raised loans around Rs 48,000 crore from various sources. 

70% of the state's total electrical consumption is met by KPC, and the remaining 30% of the power comes from other sources. There are worries that if measures are not taken to save the corporation that is in financial trouble, future power generating projects may suffer.

"The KPC is in a financial crisis. The power companies have to pay huge amounts of dues for the power that they have purchased from KPC and if this situation continues, there will be a severe financial crisis. Chief Minister Siddaramaiah, who is also the KPC chairman, has been requested to explain the situation and take some reform measures." said Subramani J., General Secretary, Karnataka Electricity Corporation, Federation of Statutory Societies speaking to the Republic. 

Loan from banks for maintenance of new schemes 

A loan amount of Rs 40,341.02 crore has been borrowed from banks for the construction and maintenance of new schemes of the state government such as Bellary Thermal Power Station, Yaramaras Thermal Power Station, Yelahanka Gas Based Power Generation Station. 

“The question arises as to how a public sector undertaking will survive if the power is not fully funded by various power companies even if it is taken on loan to set up a plant to generate power and supply it to the state’s network,” said Energy expert Prabhakar while speaking to Republic Network. 

Prabhakar also gave a sneak peek into the history of KPC and quantum of electricity is producing by stating that "Established in 1970, the Karnataka Power Corporation is providing a total of 8,738.3 MW of electricity to the state's network from all forms of power projects in a phased manner, starting with the generation of 746 MW of hydroelectric power. The Yelahanka gas-based power generation station (370 MW) and the waste-to-power generation station (115 MW) at Bidadi are yet to become operational. For the last 53 years, the state has been providing nearly 40 percent of the total power demand at low rates."

Suggestions to state government 

The Federation of Associations of Karnataka Power Corporation Limited has given some suggestions to the state government to overcome the losses and said that the “financial situation will improve if implemented.”

1) The KERC should be directed to frame a rule to fix a uniform rate for all sources of electricity supplied to the state's network from any source, including hydroelectric power. The rate per unit of hydroelectric generation has not been revised for decades. Even now, the supply companies are paying 80 paise per unit. 

2) The union has also suggested a uniform rate for electricity generated from any source including thermal power, hydroelectricity, solar power, wind power, gas-based, waste-to-waste generation, etc.

3) The former managing director along with a team of several expert engineers had prepared a blueprint for installing renewable power projects such as wind power and solar power generation plants in various project areas of the corporation. Cooperation should be given to implement this project. 

4) It has also sought cancellation of the contract of Yarmaras Thermal Power Station and allowing the commissioning and maintenance of units by the employees of the Corporation on the lines of Raichur Thermal Power Station and Bellary Thermal Power Station.

5) Bills for purchase of power from autonomous bodies of the central government such as NTPC, NPCIL and private power companies are issued to banks every month through letter of credit. Similarly, the concerned power companies should be directed to issue a letter of credit for billing of power purchase in the state as well. 

6) Renewable Power Projects Such As Wind Power And Solar Power Generation Units Have Been Operated By Our Corporation For The First Time In The State. Nowadays the corporation has been deprived of opportunities by renewable power projects. Therefore, it has been suggested that a minimum of 50 per cent should be given to the corporation on priority.