Free power, proposal to increase tariff boomerang

State will have to shell out Rs 2000 crore as subsidy to farmers IP sets
Last Updated 12 September 2009, 18:22 IST

Free power promised to the farmers, the state’s ambitious project and the recent proposal for tariff revision,  have now become an invitation to trouble for the State government, as the power will be more costly if the proposal becomes a reality.
With nearly 30 percent of the power going to the Irrigation Pumpsets, the State might find it difficult to keep its promise of free power. But the Escoms contend that the power tariff hike is necessary considering the increase in supply cost.

“The average cost of supply, if tariff increases, will be Rs  4.83 per unit after the revision. But the fact is that 12,000 million units goes to the IP sets, pushing the requirement to Rs 5784 crore rupees, from the existing Rs 4,800” said a power expert.

M G Prabhakar, Chairman, Energy committee FKCCI explains “The total budgetary allocation from the subsidy being Rs 1,800 crore, another Rs 500 crore is the additional allocation. The new tariff will fetch an additional cross subsidy of Rs 450 crore. What about the remaining Rs. 2,134 crore rupees which is the revenue gap. The purpose of increasing the tariff will be defeated,” he said.

Of the total energy produced, about 12,000 million units goes to IP sets of which IP set consumption under Bescom is estimated as 4017 million units (MU). For Mescom it is 830.74 MU, Hescom it is 3095.76MU. The consumption under Gescom and Chescom are 2179.36 and 1640.21 MU respectively.

The Power Sectors, which are banking on cross subsidy from the Industries to fill the revenue gap now have bad news. The Industries which consume about 9000 MU annually are in bad shape following poor power supply and global economic recession.

“Of the 3.8 lakh industries of all sorts, over 20,000 garment units have shut their shops, while more than 50,000 units which require uninterrupted power have withdrawn from the grid  from the sector as already thousands of industries especially garment sectors have shut their shops. There is no question of consuming 9,000 million units now,” said Jacob Crasta, Chairman, FKCCI.

In addition to this, the Bhagyajyothi, Kuteera Jyothi and electricity to pump and supply drinking water will also add to the woes of Escoms. Moreover, the delay in releasing subsidy money by the Government will cost the power utilities dearly. With large part of the State having been declared drought prone, the IP set consumption is likely to affect the power situation.

With the water depleting drastically across the state, the power situation will be worse in the days to come.

DH News Service

(Published 12 September 2009, 18:22 IST)

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