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Home News Power Sector News Bengal - No more subsidies, govt. for power tariff hike

Bengal - No more subsidies, govt. for power tariff hike

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WBSEDCLAfter seeing the disastrous consequences of pursuing a populist policy in the power sector, the Mamata Banerjee government has tentatively decided to consider hiking the power tariff. According to Partha Chatterjee, the state industry minister, who is also heading the three member ministerial committee looking into this, the government will give the go ahead to the state power facilities to petition before the regulatory commission for the tariff hike around December this month. It is reliably learnt that the ministerial committee has proposed to keep the domestic consumers out of the ambit of the tariff hike, while recommending a stiff hike for the commercial and industrial consumers. But even this conditional hike did not get the approval of the chief minister.

Last Friday the three member committee, comprising of industry minister Partha Chatterjee, finance minister Amit Mitra and power minister Manish Gupta, had a lengthy meeting with the chief minister but they could not get it passed. It is learnt that the finance minister is also opposed to the idea of giving subsidy to the large segment of domestic consumers, which may run into Rs.500 crores annually. The finance minister was trying to keep the relief in tariff-hike restricted to the poorest of the poor section of the domestic consumers; the chief minister was not amenable to it. She wanted to extend the scope of the relief to the entire section of domestic consumers. Accordingly, Partha Chatterjee led committee proposed to keep the majority of the domestic consumers out of the ambit of the tariff-hike. But, the meeting could not reach any conclusion as the government was not in a position to provide for the huge subsidy it required.

Meanwhile, the state run power generation and distribution facilities like the West Bengal Power Development Company Limited (WBPDCL) and West Bengal State Electricity Distribution Company Limited (WBSEDCL) have been facing severe fund crunch owing to the cap put by the state government on tariff hike. According to senior officials in WBSEDCL, the company's loss has surpassed Rs. 1000 crore in the last seven months, and if things are allowed to continue it would reach Rs.1600-Rs.1800 crore. Similarly, the WBPDCL is also facing problem in making payments to Coal India for the supply of coal. Already WBPDCL has demanded from the government Rs.60 crore for meeting their commitments to Coal India. The WBSEDCL is also pressing the government for financial aid.

"Even if the government takes a policy decision to hike the power tariff, it requires a minimum of four months to implement that. The WBPDCL, DPL and WBSEDCL will have to petition separately to the regulatory commission and those will have to be examined and weighed before the commission gives its verdict. So, if the government gives the green signal in December, the hike would be implemented in April, 2012 only. That means a full year would be lost, causing the power facilities financially ruined. The government must realize that ultimately the burden will have to borne by the consumers only," commented a senior official in power sector.

The only privately run power facility CESC has implemented the new power tariff from April, 2011 and gearing itself for making a fresh petition to the regulatory commission for further hike due to the rising cost of fuel.

Source- Business standard

 

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