Pvt power suppliers make tariff cut tough

MUMBAI: Chief minister Prithviraj Chavan on Wednesday accepted the fact that offering subsidy to consumers in Mumbai was a 'complex' issue due to involvement of private suppliers and that the legalities of various aspects and possibilities were being studied before arriving at a final model for its implementation. However, he maintained that state was committal on reducing tariff of Mumbaikars on the lines of 20% cut for state consumers.

Power tariff reduction for Mumbai is much more complicated than the one made for state consumers for various reasons. First and foremost, the Maharashtra tariff is highest in the state than the one of private suppliers in the city and so granting subsidy to MSEDCL to not increase the burden on consumers before the next coming tariff revision was a necessity in a poll year. Secondly, the MSEDCL is a state agency and so administratively implementing subsidy distribution was much easier for the government than to take a similar decision for Mumbai that involves several private players.

"Though state can extend subsidy any addition or reduction in tariff of private suppliers is the prerogative and jurisdiction of MERC and not state. State can't pay directly to private suppliers and will have to route subsidy to consumers upon MERC approval. Similarly, government is not sure whether it has powers to audit suppliers' accounts to suggest some measures to reduce tariff," said sources in the power ministry.

Powers to audit accounts of suppliers such as Reliance and Tata Power and asking them to reduce certain components of tariff are only with MERC and not with state. "And if at all MERC permits to pay subsidy to consumers through Aadhar, a separate mechanism and machinery will have to be deployed," sources said.

However, sources said, state could reduce taxes and duties charged by it on the power supplied by private players but then it would have to be implemented for rest of the state too which means even more subsidy to state power consumers who have already been awarded 20% cut. Experts with the state government are of the opinion that taxes and duties should not be touched as they are the foundation of the state's economy. "It could have been ideal had stated reduced taxes and duties by 10% and offered 10% subsidy to reduce burden on state exchequer. This is because state has already committed Rs 8400 crore to MSEDCL to reduce 20% tariff and has several financial constraints," said sources.

Independent experts said in case of BEST state could directly pay Rs 450 crore to meet the transport losses presently being recovered from power consumers. Interestingly, opposition leader Eknath Khadse has demanded withdrawal of these charges terming them 'unfair' and has threatened agitation.

"In case of R-Infra state can partly pay regulatory asset charges (Rs 460 crore out of total Rs 925 crore) which are being recovered from consumers every month to reduce tariff. In case of Tata Power and rest of Mumbai a certain amount of cheaper power from the central sector (the NTPC) or cheapest hydro power from Konya can be given to further reduce the tariff. Also standby charges of about Rs 500 crore recovered from the consumers across Mumbai can be subsidized by the government to offer up to 20% reduction," said experts.

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