Electricity charges across the country are likely to rise by
upto 20% this year, on top of a similar increase in 2012, as the government
wants to continue with pricing reforms vital for the stuttering sector.
Power Secretary Mr. P Uma Shankar said that all lending and
restructuring schemes have been linked to tariff revisions by state
distribution utilities. “Every programme we are launching for distribution
utilities has tariff revision as the basic eligibility condition so that there
is no escape from it. The idea is to gradually make distribution companies cash
positive by bridging the gap between their costs and revenues.”
Some experts in the sector are of the view that the reforms
process may by dented by the general elections due next year, but distribution
utilities in many states which includes, Haryana, Punjab and Delhi, have
already filed their tariff revision pleas for 2013-14 with regulators while
others are in the process of doing so. Utilities were earlier not so prompt in
filing tariff petitions.
Raising tariffs will be a stimulus for the sector as it will
help distribution companies come out of the red and be in a position to make
timely payments to generation companies. This will also boost power supply as
state utilities often resort to power cuts because of their poor financial
health even if generating companies are able to supply more electricity.
Delhi power distribution companies expect a 5% rise in
electricity prices and about 15-20% surcharge to make up for past losses.
A senior official from a research firm said most states
would see revisions in annual tariff to the tune of 18-20% due to commitments
made under the state debt restructuring plan, efforts to cover past revenue
gaps, and increase in operating and power procurement costs because of costlier
fuel.
Mr. P Uma Shankar further said power distribution companies
have no option but to revise tariffs every year, which is the basic condition
to be eligible for any programme of the ministry. The debt restructuring
package launched to wipe out the Rs 1.9-lakh-crore accumulated losses of power
distribution companies mandates utilities to commit yearly tariff revisions.
Under the scheme, distribution utilities will be eligible for a grant if they
reduce the gap between the average cost of supply and average revenue realization
by 25% annually.
According to industry estimates, the average gap between
cost and revenue in 2012-13 was likely to be 58 paise per unit, down from 75
paise estimated in 2011-12.
Mr. Shankar also said about 6-7 focus states, including
Jharkhand, Haryana and Tamil Nadu, have conveyed their willingness to participate
in the bailout package.
Power Finance Corp Chairman and Managing Director Mr. Satnam
Singh said tariffs were bound to rise since banks and financial institutions
have imposed strict conditions for lending to state distribution companies.
The country has witnessed an extraordinary number of tariff
revisions last year that was not limited to states ruled by any particular
political party. States began raising tariffs after a directive by the
appellate tribunal for electricity asked distribution companies to file tariff
revision petitions by April 1 every year. The order mandates state regulators
to begin the exercise if distribution companies fail to do so.
Sourced
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