Power at Rs 5 a unit? Pact with Centre actually demands 14% tariff hike

Tariff pronouncement is already delayed by a month, still, as the state government has not given its mind on the subsidy to the PSPCL, the new rates might take two to three weeks more.
The power department of Punjab and the state power regulator are in a quandary over giving electricity at Rs 5 a unit to all consumers as announced by chief minister Capt Amarinder Singh.
The announcement is in conflict with previous Akali-BJP regime’s commitment to the Centre last year to increase the tariff by 14% in next two fiscals while adopting the Uday scheme. A tripartite agreement among the Union ministry of power, state government and Punjab State Power Corporation Limited (PSPCL) lays down that the electricity tariff shall be raised by 5% in 2016-17 and by 9% during 2017-18.
However, in 2016-17 tariff was reduced by .5%, and thus to stay true to the Uday agreement, the state government will have to hike the tariff by 14.5% this fiscal.
Tariff pronouncement is already delayed by a month, still, as the state government has not given its mind on the subsidy to the PSPCL, the new rates might take two to three weeks more.
On becoming signatory to the Ujwal Discom Assurance Yojana (UDAY), aimed at reviving the power  distribution companies, the Punjab government has taken over the Rs 25,000-crore liabilities of the PSPCL and the interest thereon has been reduced from 12.55% to 8.36%. The interest on bonds is to be paid for five years by PSPCL and later by the state government.
Top officials of the power department say the ball was now in the court of the Punjab State Electricity Regulatory Commission (PSERC) as the PSPCL has already filed a petition to revise tariff. In the absence of clarity on the matter, the power regulator was silent.
Becoming signatory to the Uday scheme has not helped Punjab much, because it could only get Rs 600 crore in the last financial year – Rs 250 crore for integrated scheme for distribution system in urban areas and Rs 350 crore under the Deen Dayal Upadyay scheme for improvement of power distribution in rural. In comparison, Bihar got Rs 8,000 crore and Uttar Pradesh Rs 6,000 crore, of which 75% is grant.
“Uday has not helped Punjab much but it has put us in an obligation to increase the tariff. Let us see how the government deals with the situation,” said a PSPCL official.
The average cost of power in Punjab is Rs 6 per unit, and if it is hiked as per the agreement signed with the Centre, it has to be increased by at least 90 paise per unit. If the government wants to bring it down to Rs 5, it will have to give a subsidy of a few thousand crore rupees in addition to the existing Rs 6,300 crore against free power to farmers, SCs and BPL consumers.
It is to be seen how finance minister Manpreet Singh Badal and power minister Rana Gurjit Singh fulfil the promise made to the chief minister to give power at Rs 5 a unit to all consumers.