Capt’s power @ Rs 5/unit promise to give Rs 3,200-cr shocker to exchequer

Chief minister Captain Amarinder Singh’s populist announcement of providing electricity at Rs 5 per unit to all consumers (domestic, commercial and industry) in Punjab will put an additional burden of Rs 3,200 crore on the state exchequer.
Though a final word from the state government on the revised power tariff is awaited, the Punjab State Electricity Regulatory Commission (PSERC) has worked out a rough estimate of the burden it will put on the state finances.
Waiting for the government’s nod, the PSERC has so far not released the tariff plan for 2017-18, which should be have been out on March 31. Sources say it has been deferred till May. “We need at least one more month to finalise the tariff after clarity on the subsidy,” said a PSERC functionary.
“I would fulfil the promise made by the CM and soon announce a roadmap and mechanism to be adopted for cheap electricity,” power minister Rana Gurjit Singh told HT.
In the 2016-17 fiscal, the Punjab government paid a subsidy of Rs 5,200 crore for providing free electricity to farmers for tubewells. “If the government decides to charge Rs 5 per unit from all consumers, it will put addition burden of at least Rs 3,200 on state exchequer, bringing it close to the Rs 10,000-crore mark,” said a PSERC official. In the last financial year, the government also paid a subsidy of Rs 1,100 crore for providing power to the Scheduled Caste and below poverty line consumers.
PSERC figures reveal that all (On the rate card, 13% excise duty, 5% infrastructure development cess and 10 paise a unit octroi is charged) categories of consumers, except pumpsets used for agricultural purpose, consume about 32,000 million units in a year. The average landing cost of power to the consumer in Punjab is Rs 6 per unit, so the additional Rs 1 per unit had to be compensated by the state government.
Things are not simple as they look. Punjab State Power Corporation Limited (PSPCL) has sought a power hike of 20%. The hike, if allowed, will also be added to the power subsidy bill. Also, the state government has a bad track record of paying the farm sector subsidy amount to the PSPCL. The government failed to pay Rs 1,235 crore of 2015-16 which was carried forward in 2016-17. The cash-strapped state government might face an uphill task to clear the subsidy amount, say experts.
TARIFF REBATE TO HAVE CASCADING EFFECT, SAYS MANPREET
Talking to HT, Punjab finance minister Manpreet Singh Badal said rebate on power tariff to all consumers would have a cascading effect on the state’s development. “This is a gamble, but we are ready for it. We are ready to give subsidised power to all consumers,” he said, adding that the state government don’t want to lose the existing industry (in the state) and subsidised power would be a big booster for it. Industry consumes about 70% of the total power in the state.
“In the 1960s, we were able to do build Punjab because of cheap and surplus power from the Bhakra Dam. We are trying to repeat that phenomenon by giving cheap power,” said Manpreet, adding that the government would make budgetary provisions for the power subsidy.