In a populist move before the Lok Sabha and assembly elections, the state government has decided to slash power tariffs by 20% for consumers across categories like domestic, commercial, industrial and agriculture.
Arvind Kejriwal-led Delhi government had recently slashed power tariffs and the state government had appointed a committee under industries minister Narayan Rane to look into rate cuts considering the burden on industrial consumers.
This state cabinet’s move on Monday will cover around 90% of power consumers in Maharashtra serviced by the state electricity distribution utility. It will involve a cost of around Rs8,500 crore to the state exchequer — including Rs606 crore per month by the state and Rs100 crore by the generation and transmission companies. The move has met with apprehensions from within the cabinet and the finance department.
The cabinet is also likely to take up the reduction in electricity tariffs in Mumbai, which is serviced by three distribution companies, of which two are private.
The rollback in September 2013 tariff hike, which will also cover consumers in the eastern suburbs of Mumbai like Bhandup and Mulund, who get power from the Maharashtra State Electricity Distribution Company Limited (MahaVitaran), will be applicable from February onwards.
It will need approval of the Maharashtra Electricity Regulatory Commission. This will, however, not apply to public services like railways, water supply schemes and street lighting.
However, while some ministers wanted tariffs to be reduced further, the move also had its own naysayers. “This is a notional measure,” said a senior Congress minister, adding that while power cuts continued in rural areas, the quality of service was bad with some field offices lacking adequate staff and infrastructure.
“The present proposal will have an adverse effect on the long term... growth of the energy sector,” said the finance department’s remark on the cabinet note, which was accessed by dna.
It pointed out that while agricultural subsidy had a historical base, the present proposal expands subsidies to all classes and is “clearly sub-optimal. It added this would lead to a heavy burden on state finances and lead to curtailment of expenditure in other areas. “We will not be able to keep a revenue surplus and hence lose on the debt relief benefit,” it said.
Leader of Opposition in the Legislative Council Vinod Tawde said on Monday that the decision of the state government to reduce electricity tariffs will only help fill the coffers of industrialists in the state.
While domestic consumers using 0-100 units will have their tariffs reduced from Rs4.16 per unit to Rs3.36, the decrease for those using between 100 and 300 units will be from Rs7.42 to Rs6.05. However, the fixed charge of Rs40 per month continues.