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Growing demand for energy from the agriculture sector is set to result in a sharp rise in the subsidy bill of the state government. Currently, the state government is paying a subsidy of Rs 5,200 crore for agriculture pump sets.
"The demand for power by the agriculture sector has increased from a mere 12,000 million units about five years ago to 17,000-18,000 million units in the current fiscal. This state government pays for for the power supplied to the sector," said M R Sreenivasa Murthy, Chairman, Karnataka Electricity Regulatory Commission (KERC).
Last year, the subsidy bill was assessed at Rs 5,200 crore and if the demand grows at 8 per cent per year, the government's subsidy burden will go up by 13-14 per cent every year, Murthy said.
Addressing a conference on "Karnataka Power Sector: Roadmap for 2021-22", organised by Bangalore Chamber of Industry and Commerce (BCIC), here today, the government's subsidy burden will be Rs 8,000 crore in the next three years if the current trend continues.
The government provides free power to about 2.2 million irrigation pump sets across the state.
"The subsidy amount per irrigation pump set amounts to Rs 25,000 per year. It is now up to the government to decide, in the context of the Fiscal Responsibility and Budget Management Act, whether they can provide for a progressively ballooning agriculture subsidy burden of this kind," he said.
However, he said the agriculture sector should not be deprived of energy. "They should be given more and more power, because the agriculture potentially needs to be fully developed.
They should also use power for processing and several cultivation activities. The intensity of power consumption of agriculture sector is very low in the state. It has to increase, if agriculture has to become more viable occupation," he said.
Murthy stressed on the need to find a way to pay for the electricity used by agriculture sector. "There must be a viable solution for this issue, which will become a fiscal issue to the government sooner or later," he said.
He also suggested the bifurcation of KPCL into several companies for executing various new projects, as many new projects require lot of attention.
Karnataka Power Corporation Limited, he said, is overburdened with a vast number of new projects. The KPCL is currently executing new thermal power projects like Yeramarus (1600 Mw), BTPS-3 (700 Mw), Bidadi gas unit (700 Mw), Yedlapur (800 Mw), Godana (1600 Mw) and Gulbarga (1320 Mw), awaiting either coal linkage or finalisation of tenders.
"Can one company with the kind of structure of management that we have manage these many new projects. It has to also manage the load factors and take care of its hydropower units in Western Ghats and look after new projects," he said.
"My personal opinion is that it is time for KPCL structure to be analysed by somebody and see how it can be made more efficient either by setting up more satellite units or convert it into a holding company and set up a number of companies for individual projects. This is something the state government must consider," he added.
The state government must really have a very focused strategy for implementing new projects, he said.
"If this 6,500 Mw additional capacity is not coming on stream on time, we are going to be in a crisis so far as power is concerned. The present pace of implementation does not seem to hold a great deal of promise," he added.
