Karnataka mortgages buildings, hydroelectric projects to raise money to purchase power
Bengaluru: Amidst the concerning backdrop of frequent power cuts and rising tariff impacting their revenues, numerous industries find themselves confronted with grim energy prospects. The scarcity of rainfall, coupled with the South West monsoon’s failure, has left Karnataka struggling to meet the escalating power demand.
Confronted with an unforeseen surge in power demand, the Energy Department is grappling with a crisis. To alleviate this, it has resorted to mortgaging assets, including buildings and hydroelectric projects, to secure financing for purchasing power from other States and meeting the demand.
The implementation of the Gruha Jyothi freebie scheme (200 units of free power to all households) has doubled the demand for power in Karnataka, reaching an unexpected peak of over 15,000 MW in October 2023. On a daily basis, the State is grappling with a shortfall of 40-50 million units (MU).
While the monsoon displayed moderate activity in the last two weeks of July, there was a significant rainfall deficit throughout August and September, except for sporadic showers. This has resulted in low storage in major hydro dams, with an energy deficiency of approximately 3,000 MU for the current year.
Compounding the challenges, the Karnataka Power Transmission Corporation Limited (KPTCL) and five electricity supply companies (Escoms) have failed to settle their dues to the Karnataka Power Corporation Ltd., (KPCL). Transmission and distribution losses are also escalating.
The State Government owes KPCL an alarming Rs. 21,000 crore, with an additional Rs. 1,200 crore obligated per month due to various populist energy schemes. Faced with rising demand and a failed monsoon, the Energy Department is compelled to procure electricity from other States and private power generation companies, resorting to mortgaging assets and hydroelectric plants to fund these acquisitions.
The escalating power deficit is becoming a critical issue in the State, with farmers lamenting the lack of irrigation pumps and industrialists apprehensive about frequent power cuts and tariff hikes. In response to these challenges, the State Government is taking various measures to mitigate the shortage. Apart from mortgaging assets, the Energy Department officials have announced active participation in bidding to purchase power.
While the Government endeavours to address the crisis, the Congress party’s free electricity scheme is contributing to the demand surge. This has brought Chief Minister Siddharamaiah’s regime under scrutiny, providing Opposition parties with political ammunition to question the Government’s competence and financial management, particularly in the months leading up to the Lok Sabha polls.