Inaugurating the first Renewable Energy Global Investors Meet (RE-Invest), prime minister Modi castigated political parties for promising to supply power at reduced rates saying how could they make such promises when the concerned states are dependent on electricity supply from outside. The remark was targeted at Aam Aadmi Party (AAP) which in its election manifesto, had promised to cut electricity bills by half even as Delhi meets nearly 70% of its power requirements from other states. In 2015-16, its total requirement is expected to be over 6000 MW; so it will draw 4200 MW from other states. However, it would be imprudent to dismiss this as a political statement directed at AAP alone. Cutting across party lines, Modi was making...
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Category: Tariff Policies & Subsidies
Cleansing the maligned coal sector in India
In August/September, 2014 when Supreme Court (SC) declared all 218 coal blocs allotted since 1993 ‘illegal’ followed by de-allocation of ‘all’ except 4 [2 of these are with PSUs viz., NTPC and SAIL and other 2 are for ultra mega power projects (UMPP) given under competitive bidding], this led to a hue and cry. The associations representing the beneficiaries of illegal allotments – in their presentations before SC – submitted that investment to the tune of about Rs 250,000 crores in development of coal mines and another Rs 400,000 crores in setting up of end use projects viz., power, steel, cement etc would be at risk. Commentators too joined the chorus opining that this will affect availability of domestic coal...
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Prune subsidies vide censoring producers
Contrary to expectation, there was no big bang reform in regard to subsidies in Modi-government’s maiden budget presented on July 10, 2014. However, Arun Jaitley announced setting up of an expenditure reforms commission (ERC). While, we may have to wait for ERC recommendations until next budget in February, 2015, meanwhile Jaitley has given some ideas on direction in which government intends to move forward. Thus, he opines that extant dispensation of subsidies which he describes as ‘un-quantifiable’ and beneficiaries ‘un-identifiable’ cannot be allowed to continue. He emphasized need for replacing this by a system of direct subsidy transfer to poor. To countenance menace of subsidies, Jaitely alluded to fundamental need for consumers/users to pay for increase in cost of goods...
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Consumers fleeced yet, power companies lose – can CAG unravel mystery?
Aam Aadmi Party (AAP) commitment to reduce electricity rates by 50% generated some hope for consumers in Delhi who had suffered steep increase in power tariff by nearly 70% since privatization of distribution in 2002. AAP has been in power for almost 6 weeks and yet hapless consumers have no relief in sight. Government is yet to give effect to a cut of 50% for consumption up to 400 units a month announced on assuming office. Meanwhile, Delhi Electricity Regulatory Commission (DERC) has hiked in power purchase cost adjustment charge (PPAC) by 6-8%. Even worse, an imminent cut in supply haunts them due to a threat given by NTPC (it supplies around 50% of Delhi’s power need) as power distribution companies...
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Populism is back with a big bang
Close on the heels of AAP government in Delhi announcing a 50% cut in power tariff on supplies to residents consuming up to 400 kwh (units) per month, other states have followed suit. While, Haryana has notified similar cut, Maharashtra has slashed tariff by up to 20% for consumption by residents up to 300 units per month. On supplies to farmers wherein rates were already low at Rs 1-1.5 per unit, tariff has been reduced by a further 50%. The claims by these governments that the decisions will not affect their respective budgets are baseless and un-substantiated. In Delhi, Mr Arvind Kejriwal had proclaimed that funds to support 50% cut in power tariff – across the board – would be...
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Is Kejriwal indulging in populism?
In a drastic shift from conventional approach to governance, immediately after being sworn in as CM of Delhi, Mr Kejriwal has got cracking and taken decisions to deliver on two major promises made in AAP’s election manifesto. These are reduction in power tariff by 50% on supplies to households consuming less than 400 units and supply of 20 kilo liter of water per family per month ‘free’ to all those families having a metered connection. For decades, established political system has either reneged on commitments given to the public or acted with a huge time lag giving much less than what was promised. Quite often, winning parties have even slept over till it is time to face electorate again. This pattern...
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50% cut in power tariff – Mr Kejriwal can deliver
In its election manifesto, Aam Aadmi Party (AAP) had promised to reduce electricity rates by 50% if voted to power in Delhi. Even before new Government under Mr Kejriwal settles down, doubts have been raised whether he can do it. Staunch critiques rule it out completely on the ground that a 50% cut would require a steep increase in subsidy from existing Rs 550 crores per annum to nearly Rs 5000 crores. But, Mr Kejriwal is certainly not looking at this option. He alleges that there is lot of ‘bungling’ in the manner three power distribution companies (PDCs) viz., BSES Yamuna Power/Rajdhani Power and Tata Power Delhi Distribution are run. They mis-appropriate funds through un-metered sales, inflated operation & maintenance...
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