Power point

Print edition : February 21, 2014

Congress workers protesting outside the Reliance Energy office in Kandivali, Mumbai on January 13. Photo: PTI

IN what seems like a ripple effect of the Aam Aadmi Party’s decision to cut power rates in Delhi and clearly with an eye on the elections, the Maharashtra government announced a 20 per cent cut in power tariffs across the State barring Mumbai. It would apply to all user segments: industrial, agricultural, commercial and residential users who consume less than 300 units a month.

The State has among the highest power tariffs in the country and the stiff rate hike was effected only in September 2013. The Maharashtra State Electricity Board (MSEB) estimates this subsidy to cost the State’s exchequer Rs.8,472 crore a year.

An official spokesperson from the MSEB told Frontline that the State will compensate for this shortfall by giving Mahavitaran, the distribution company, Rs.606 crore every month. Another Rs.100 crore each month will be shared by the power generation company Mahagenco and the transmission company Mahatransco. “The Electricity Act 2003 has these provisions and the State is following the procedure when providing subsidies,” he said. In effect, the September hike has been cancelled.

Mumbai city is also expecting a tariff reduction. The MSEB says the proposal has gone to the Maharashtra Electricity Regulatory Commission (MERC) and a decision is pending. State Industries Minister Narayan Rane said that the government would like to give some relief to Mumbai as well. Rane had constituted a committee three months ago to study the feasibility of the cut, and the announcement was a result of that.

Mumbai is serviced entirely by private companies: Tata Power Company and Reliance Infrastructure. Since it involves private companies, only after the MERC gives its approval can the government announce a subsidy for the city. Politicians across party lines, however, have demanded that the government give Mumbaites the same respite.

In an AAP-style demonstration, Congress Member of Parliament from Mumbai, Sanjay Nirupam, began a hunger strike at the Reliance Infrastructure office demanding the reduction of power tariff in Mumbai. He ended the protest after the Chief Minister assured him that something would be done.

The MSEB said it would be a tough decision as the government would have to subsidise corporates, which would be unfair given that they already had a monopoly.

Official figures indicate that the tariffs in Mumbai are comparable with the rest of the State. Reliance Infrastructure, which has the highest number of consumers (20 lakh) in the suburban regions of the city, charges between Rs.3.93 and Rs.6.84 according to the number of units used. Tata Power has close to 1.2 lakh consumers and charges between Rs.2.13 and Rs.3.62. The Brihanmumbai Electricity Supply and Transport (BEST), the only public sector company that services the island city, charges between Rs.3 and Rs.5.53. The rates in Vidarbha and Marathwada regions range from Rs.3 to Rs.3.60 says the electricity board.

With neighbouring Gujarat offering rates that reach a maximum of Rs.5.70 and minimum of Rs.2.75, many new industries as well as loyal Maharashtra companies have moved to Gujarat. “We believe there are benefits to cutting rates, but the State should have the ability to compensate its electricity board as well,” says the MSEB official.

The opposition criticised the 20 per cent slash. “It should have been reduced further,” said the Bharatiya Janata Party leader Vinod Tawde. In any case the rates were expected to come down owing to the cancelling of a surcharge that is currently being levied.

During the 2009 general elections, the Shiv Sena had made electricity the central point of its campaign. It protested vociferously outside Reliance Infra, but the issue fizzled out after it lost the election.

Meanwhile, the MSEB and Ratnagiri Gas and Power Private Ltd (RGPPL), better known as the Dabhol power project, continue their decade-long battle. According to the RGPPL, unless the distribution company Mahadiscom pays its Rs.1,003 crore debt, they will not be able to survive.

The MSEB said it had paid all its dues and added that it would not pay for power that is being supplied from R-LNG (regasified liquefied natural gas, an imported fuel). “Any use of a new form of fuel had to be cleared by us before use according to the Power Purchase Agreement,” said the spokesperson.

Mahadiscom was categorical that it would not pay more than Rs.4 a unit. Running the RGPPL on imported gas would make electricity expensive to the tune of Rs.10 a unit.

Anupama Katakam

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