Central Govt wants debt ridden discoms to go for gradual tariff hike

New Delhi: The Centre on Wednesday asked the states to increase power tariff gradually over a long period against the backdrop of burgeoning debt of power distribution firms.

Power Minister Piyush Goyal

“We are trying to introduce an innovative way how can these tariffs can be increased gradually over a longer period of time rather than burdening people with very massive jumps,” Power Minister Piyush Goyal said during an interaction organised by Indian Women’s Press Corps (IWPC).

On account of subsidised tariffs, the state electricity discoms are facing cash crunch and are incurring annual losses of about Rs 60,000 crore. The Power Minister also said the Centre in close coordination with states is working for a permanent solution to this problem.

“People will pay what is fair cost of power and increases will be what are fair and for that we have a regulatory mechanism which determines what is the correct pricing,” he said.

However, Goyal said that increasing power tariffs cannot be the only solution to set discoms right. “I had several rounds of discussions with almost all the states who had the problem, be it Jharkhand, be it Tamil Nadu be it Andhra Pradesh and Telangana, be it Madhya Pradesh.

With all the states we have been continuously interacting and working towards a solution,” the minister said.

“Every state in the country is supporting this effort and is participating whole-heartedly. We had a series of meetings and these meetings will continue in the next few days and we will come to a consensus, which after approval from the Cabinet, will be implemented,” he added.

Goyal further said as part of efforts to revive the discoms and turning them around, the government will ensure that not even a single employee of the power sector is displaced.

“Everybody will be taken care of,” he said.

He further said that setting of the electricity tariff is the prerogative of the regulator and there is a regulatory framework in which tariffs have to be set. The government had recently said that it is working on debt recast of state power distribution companies to improve the deteriorating financial health of the discoms that are also responsible for rising bad loans of public sector banks.

“We are working very closely with the Power Ministry and also the affected eight stressed states,” Finance Secretary Ratan P Watal had earlier said.

A lot of progress has been made in the power sector over the last one-and-a-half years and the financial health of discoms has received the highest attention of the government, he had said.
with PTI

Posted by on October 7, 2015. Filed under Economy, Editorial. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.