Tuesday, December 31, 2013

Who will pay the SUBSIDIES for the RICH? The POOR TAX PAYERS...? 
Two listed private distribution utilities, Tata Power and Reliance Infrastructure, supply power in the capital city, Delhi. R-Infra has management control of BSES Rajdhani Power and BSES Yamuna Power.

These distribution entities say it is tough to decrease retail power rates. “The cost of power in Delhi has increased by 300 per cent since 2002, while the retail rate has increased by (only) 65-70 per cent. This has created a huge financial burden for all the private discoms in the city,” said a distributor who refused to be named.

Apart from other impacts, experts feel power rates could be reduced over time by reducing power procurement costs.

“The cost of power production has gone up tremendously in the last 2-3 years. It is likely that the power regulatory commission will hike the tariff in the state. However, to give relief to the common people, we have decided to offer Rs.200 crore subsidy in this year,” said Assam Power Minister Pradyut Bordoloi.

“The cost of natural gas has gone up by 165 per cent to Rs.5,091 per 1,000 standard cubic metre now from Rs.1,920 in 2012. Likewise, the coal price has also shot up by 85-150 per cent in this period,” Bordoloi said.

The cost of hydro power generation is less compared to the other modes, but in this case also expenses related to transportation, transmission and other factors have increased by 30 per cent in since 2010, he added.

Meanwhile, According to The Times of India,  Debashish Mishra, senior director, Deloitte India said. "It is unlikely that the utilities can bring down the electricity tariffs by 50 per cent without government providing them with cash subsidy,"

However, he added that there may be scope for further loss reduction in distribution, demand side management measures and cost optimisation in O&M (Operation & Maintenance).

He said that broadly the tariff is determined by four factors - existing operational efficiencies, capital and cost structures, power purchase agreements, and regulatory (assured and authorised) assets in the sector.

"In the longer run i.e. over next 5 years, if annual tariff increases is contained at the existing levels by managing the four outlined factors, then effective reduction can be stated to be around 50 per cent," Mohapatra added.

Electricity tariffs were revised in the Capital in July this year. Delhiites pay a minimum of Rs.3.90 per unit tariff.

States like Maharashtra, West Bengal, Kerala and Andhra Pradesh have posted the high domestic power tariffs in the country. Maharashtra has the highest power tariff of Rs.8.80 per unit followed by West Bengal (Rs.8.per unit), Kerala (Rs.7.50.per unit), Andhra Pradesh (Rs.7.30.per unit) and Madhya Pradesh (Rs.6.80 per unit). 

An analysis of power deficits across all the Indian states suggests that Tripura has posted the highest power deficit (-33.8%) amongst the states while Delhi has lowest power deficit of -0.3%. States like Kerala (18.5%), Uttar Pradesh (17%) and Rajasthan (11%) have depicted moderate power deficits. However, Himachal Pradesh and Odisha have exhibited power surplus of (52.4%) and (12.6%) respectively. This means the power companies have functioned satisfactorily in Delhi. 

Recent hike in domestic power tariff has registered highest growth of 42% in Tamil Nadu followed by Lakshadweep (33.30%), Maharashtra (28%), Goa (23.30%) and Jammu & Kashmir (22.20%).

The three discoms in question — Reliance companies BSES, BSES Rajdhani (BRPL) and BSES Yamuna (BYPL) — have had their accounts described earlier by the Aam Aadmi Party (AAP) as being "fudged and unreliable" and thus untrustworthy regarding their revenues situation. 

Arvind Kejriwal according to media reports, estimated that the revision in electricity tariff would cost the government Rs.200 crore but Rs.140 crore of this would be borne by the power companies against their outstandings.

AAP had also earlier demanded that tariffs should only be increased after the companies' audit by the nation's Comptroller and Auditor General (CAG). But the Delhi Cabinet, headed by the lunatic Arvind Kejriwal, cleared a 50 per cent cut in electricity tariffs for those homes that consume up to 400 units of electricity a month, just on assuming the office. 

(i) The Business Standard of 24 December, 2014
(ii) The Hindu Business Line, 19 August, 2014.
(iii) The Times of India, 31st December, 2014
(iv) An analysis of power tariffs across India, February 2013 by PHD Chamber of Commerce and Industry.