The board's ambitious capital investment programmes may go haywire unless the government hike the power tariff to an average of Rs two per unit, as recommended by the SEB, immediately. The board may also find it difficult to secure bank guarantees for some of the prestigious projects in the offing unless it finds ways to make both ends meet.

KSEB's budget estimates for the year 1999-2000 has projected a net deficit of Rs 52.66 crore. This assumes significance as the board, through a successful window dressing, has posted a surplus of Rs 139.78 crore in 1998-99. The surplus last year was due to the conversion of debt outstanding to the state governmen to equity. The board is expecting arate of return to the tune of -2.09 on capital base and -3.39 on equity capital in the coming fiscal.

However, the deficit is likely to widen further as many of the anticipated revenue streams nay not be forthcoming unless it improve its financial health. While the budget has projected only a deficit of Rs 52.66 crore, the state power minister is on record saying that the board is incurring a loss to the tune of Rs one crore per day.

Sources in the power sector feel that the SEB may plunge into the inevitable debt trap if the government does not raise power tariff at lest to an average of Rs two per unit. Alarm bells are already ringing in the SEB with its revenue shrinking to rock bottom levels forcing the SEB to dip into its capital resources to meet the current expenditure. Highly placed sources in KSEB revealed that the board is using the proceeds of its Non-SLR bond issues to pay routine revenue expenditure, including employees salary.

They also said that the shrinking finances of the SEB maytrip its ambitious capital outlay estimated for the next financial year.

The SEB has estimated a capital outlay of Rs 840.75 crore up from Rs 839.82 for the previous year. The board also have to find an additional Rs 491.82 crore in lieu of interest due to institutional creditors and Provident Fund. The Seb has to raise another Rs 10.94 crore for paying back the interest on loans taken from the government, taking total capital expenditure to a whopping Rs 1342.58 for the year 1999-2000.

However, the board may find it hard to raise this amount unless it goes for a steep hike in power tariff. The revenue side of the board's budget has projected additional resources to the tune of Rs 518.31 crore by going in for hike in power tariff. If this is not forthcoming the board will find it difficult to commit funds for its proposed capital investment.

The board, in last August itself has sent a note to the state power ministry seeking to hike the power tariff. The State Planning Board has also recommended to thestate government on similar lines last year itself. It is learnt that the then power minister was cleared the proposal. But, it did not go to the state cabinet following sudden developments in the ruling front.

The Board may also find it difficult to fund a slew of projects it has lined up as commercial banks many not extend guarantee. The state government has to browbeat the Kerala State Co-operative Bank to bail out KSEBs recently concluded Rs 300-crore non-SLR bond issue.