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Home News Power Sector News 9000 crore annual subsidy in Maharashtra, 20% tariff hike averted

9000 crore annual subsidy in Maharashtra, 20% tariff hike averted

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MaharashtraMaharashtra state Electricity Distribution Company (MahaVitaran), with the latter deciding it would not need to raise billing rates, despite an okay for doing so from the state electricity regulatory commission, Maharashtra Electricity Regulatory Commission or MERC. The reason is the government's decision to bear the cost of meeting its decision of late January to cut rates by 20 per cent for the state (barring Mumbai, partly supplied by private distribution companies). The state Budget for this year has made a provision of about Rs 9,000 crore on this account. MahaVitaran says this is enough money to defer a decision on raising rates.

It had applied in February, saying it needed to recover a revenue gap of Rs 9,312 crore for 2011-12 and 2012-13, in the absence of a rate revision from April last year; plus there was the government's new rate cut order. It had said the gap could be met by revising per-unit rates by 38p to Rs 2.86 across consumer categories, excluding those below the poverty line and those with consumption of less than 100 units a month.

In response, MERC granted interim relief of Rs 5,022 crore (of the Rs 9,312 crore sought), allowing it to raise rates to get this much (for the year from March 1). It has also asked for various other remedial measures. A MahaVitaran official told Business Standard: 'MERC's order is a partial relief for MahaVitaran. Still, there will be a monthly deficit of Rs 100 crore.''

Even so, he said, there would be no rate rise; the government's added allocation would do, for now.

MERC said the interim relief had been granted in view of the extraordinary financial difficulties, with MahaVitaran also having to subsidise categories of consumers. It has told the state company to file a schedule for completion of metering of all agricultural consumers within 60 days. Plus, a detailed study of division-wise losses and a target-based plan for reducing losses in all divisions where these are higher than 20 per cent. MahaVitaran has also been told to post on its website all division-wise losses on a quarterly basis.

Source- Business standard


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