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Home News Power Sector News Uniform power tariff in Mumbai will cost Rs. 3000 crore Maharashtra

Uniform power tariff in Mumbai will cost Rs. 3000 crore Maharashtra

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MumbaiIf the Maharashtra state government does decide to take power minister Ajit Pawar's recent announcement about introducing uniform power tariffs in Mumbai seriously, it will have to be prepared to bear an additional burden of Rs3,000 crore annually for the subsidies the city's four power suppliers will have to be provided to bring their rates on a par. Last week, during the winter session of the assembly, Pawar assured the house that the government will explore the feasibility of uniform power tariff for the city. Uniform tariff is more consumer-friendly, and has already been implemented in cities like Delhi, Kolkata, Bangalore and Ahmedabad, despite them having more than one supplier.

Ashok Pendse, an expert on the power sector, feels that to make the idea work, the government will not only have to make a policy decision, but also some politically uncomfortable ones. "The utilities in Mumbai purchase power at different rates, and hence their tariffs vary. To bring parity, the government will have to absorb the burden of a huge subsidy," Pendse said.

"The other option could be to create a power pool for all the four utilities, and then distribute cross subsidy equally among the consumers, irrespective of the utility," Pendse said.

The power pool, according to Pendse, could be created in two ways--either by increasing the power purchase cost of Tata Power Company (TPC) and BEST to the level of Reliance Energy Limited (REL), or by arriving at a golden mean which will entail reducing the power purchase cost of REL and increasing that of TPC and BEST. "In this case, commercial and industrial consumers of TPC and BEST will have to subsidise the residential consumers of REL," Pendse said.

source -DNA

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