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Home News Power Sector News Shinde for hike in power tariffs in every six months

Shinde for hike in power tariffs in every six months

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ShindeClose on the heels of hike in power tariffs in many states, Union Power Minister Sushil Kumar Shinde  advocated raising electricity tariff in small dozes every six months to spare consumers of one-time sharp hikes. Shinde, the longest serving Power Minister, said hike in electricity bill was inevitable due to rise in cost of fuel used for generating power.

"We have to increase the tariff... fuel prices have increased... I feel every six months there should be a rise in power tariffs, so that the common man does not feel the heat when they are revised after a gap of seven years," Shinde said.

Small dozes 'every six months or annual increase does not hurt the consumer so much,' he said. As many as 19 states, in the last one year, have raised electricity tariffs. The steepest increase of 37 per cent has been done in Tamil Nadu while rates have gone up by 26 per cent in the national capital. The tariff hikes announced by the states include 8.4 per cent in Punjab, Rajasthan (27 per cent), Andhra Pradesh (20.24 per cent) and Haryana (17 per cent). Shinde said with limited domestic coal production, power plants have to rely on imported coal to meet generation targets.

Similarly, the fall in output at domestic fields like Reliance Industries' eastern offshore KG-D6 have forced companies to buy imported LNG which is at least three times

more costlier than domestic gas. Rising fuel cost has added to the financial burden of power distribution companies, which are already faced with high transmission and commercial losses including thefts. He said Power Ministry has asked restructuring of the Rs 2 lakh crore debt with distribution firms. The financial health of these companies have raised concerns of default in the banking system.

With such high debt, banks and financial institutions are also shying away from granting loans for the much needed capacity expansions.

As per the proposal, about 50 per cent of the debt would be converted into bonds, that would be issued by the respective state governments. The remaining 50 per cent liabilities would be restructured. Discoms would be provided a three-year moratorium and during that period, they would not have to repay the principle amount on the loans taken. The discoms would be asked to repay the entire debt in seven years.

Source- Financial Express

 

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