Power bills hike by 20%, discoms to be made cash positive
New Delhi- This year, the electricity bills are likely to be increased by about 20 percent all over the country as the government is compelled to move on with the pricing reforms which is essential for the feeble sector.
As per P Uma Shankar, Power Secretary, the restructuring and the lending schemes are tied with the tariff revisions of the state distribution utilities and that, every program the government is launching pertaining the distribution of the utilities consists of the tariff revision as the basic eligibility condition which leaves no room for people to be saved.
The key reason for the increase in power bills is to make the distribution companies cash positive by creating a gap between the revenues and their costs. Also experts in this sector state that distribution utilities in states like Haryana, Punjab and Delhi have already filed their tariff revision pleas for the year 2013-14 along with regulators despite the reforms process being dented by the general elections due next year.
The sector will witness a shot in the arm with the increased tariffs as it will unleash the distribution companies and will compel them to pay on time to the generation companies. Also since the state utilities often are resorted to power cuts due to their weak financial health, this increase will shoot up the power supply.
With the increase in the power bill, the Delhi power discoms are expecting 5 percent increase in the electricity prices along with 15-20 percent surcharge for the past loss experienced. It was stated by Sambitosh Mohapatra, Executive Director, PricewaterhouseCoopers that many states will have an annual tariff revisions as per the 18-20 percent pertaining the commitments made as per the state debt restructuring plan, the increase in operating, power retaining costs and efforts of covering the former revenue gaps.
He further stated that each year the power distribution companies have no option but to revise the rates, a basic condition to be appropriate for any ministry programme. This increase in the power bill is expected to wipe out the Rs 1.9-lakh-crore accumulated power loss from the distribution companies and also mandates utilities to commit yearly tariff revisions.
The price revisions last year were made based on the industry estimates and the gap between the revenue and the cost in the year 2012-13 was expected to be 58 paise per unit from 75 paise. States like Haryana,Tamil Nadu and others were ready to participate in the bailout package. However, Satnam Singh, Chairman and Managing Director of Power Finance Corp stated that there are increased chances of the tariffs rising as the banks and the financial institutions have rigid conditions for the state distribution companies.
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