Kerala Power Regulator Asks KSEB to Cut Loan Costs and Report in 3 Months
5 Jul, 2025 11:55 IST|Sakshi Post
In a significant directive aimed at reducing electricity costs for consumers, the Kerala State Electricity Regulatory Commission (KSERC) has instructed the Kerala State Electricity Board (KSEB) Ltd to refinance a high-interest loan of ₹2,091.68 crore availed from the Kerala Infrastructure Investment Fund Board (KIIFB) for the Transgrid project.
Kerala Power Regulator Asks KSEB to Cut Loan Costs and Report in 3 Months
The commission noted that the interest rate of 9.52% charged by KIIFB is at least 1.02% higher than the rates offered by other financial institutions such as REC and PFC. "The interest on the KIIFB loan is the highest among all the long-term loans availed by KSEB," stated the commission in its order dated June 30. It emphasized that KSEB, as the incumbent licensee, must prioritize affordability and quality of electricity for consumers and should have critically assessed the loan terms before proceeding.
The directive was issued during the truing-up process of KSEB's accounts for the financial year 2023–24. KSERC referred to Regulation 29(6) of the Tariff Regulations 2021, which mandates refinancing high-cost loans to reduce the interest burden. Accordingly, the commission has ordered KSEB to refinance the KIIFB loan and report the progress within three months.
The commission acknowledged KSEB’s consistent efforts in swapping expensive loans for those with lower interest rates and passing the savings on to the public. However, it urged further diligence in financial decision-making moving forward.
In addition to the refinancing directive, KSERC issued several other instructions:
- Salary Revision: KSEB has been asked to obtain prior approval from the state government before implementing any salary revisions.
- Power Demand Forecast: The board must prepare and submit a detailed 10-year power demand forecast and its power purchase strategy within one month.
- Solar Power Payments: The commission instructed KSEB to ensure timely payments to solar prosumers who supply power to the grid.
- Revised Solar Tariff: The tariff for solar power supplied to the grid has been increased from ₹3.15 per unit to ₹3.26 per unit, effective from April 2024 to March 31, 2025.
These directives are part of KSERC’s broader push to strengthen financial discipline in the power sector and ensure affordable energy for the people of Kerala.
