Why Punjab reels under power tariff hike shocks
High power tariff in Punjab is again under the spotlight, leading to a political slugfest between the Congress and SAD. Chief minister Capt Amarinder Singh says the power purchase agreements (PPAS) signed by the previous SAD-BJP government with private players were the main reason behind the escalation in power cost. The SAD, on the other hand, cites government’s inept handling in defending the state’s interests on paying coal washing charges to private plants in the Supreme Court. Vishal Rambani takes a close look.
WHY CONTROVERSY OVER PRIVATE THERMAL PLANTS?
The controversy erupted when Punjab State Power Corporation Limited (PSPCL) lost the case in the Supreme Court with regard to coal washing charges claimed by the private thermal plants at Nabha and Talwandi Sabo. The PSPCL paid ₹14,20 crore upfront and is facing a contempt petition for non-release of another ₹1,300 crore. The extra burden forced the power regulator to hike power tariff by 30 paise per unit. The escalation in rate of already costly power led to a political slugfest with opposition parties questioning the move. The Akali Dal alleged that ₹4,100-crore scam in the PSPCL.
CONGRESS AND AKALI DAL CLAIMS AND BLAMES
The Congress blames PPAS signed with the private players during the previous SAD-BJP regime for the mess. The PPAS were signed and the officials failed to negotiate rates properly and even left lacunae in the draft agreement. Punjab pays ₹2,700 crore every year to private thermal plants even if it doesn’t procure a single unit. Akali Dal chief Sukhbir Singh Badal, who was the deputy chief minister when the PPAS were signed, says he did as directed by the then PM Manmohan Singh-led Congress government at the Centre. However, Gujarat government’s PPAS were much better as they could do away with the fixed cost and having the first right to refuse power purchase. The Congress in its manifesto had promised to review the PPAS, and now many party leaders and MLAS are demanding the same. Aam Aadmi Party is blaming both Congress and Akali Dal for the high power rate.
WHAT IS PRESENT RATE FOR DOMESTIC USE?
Punjab provides the costliest power in the region for domestic use. Delhi charges ₹ 3 to 6.5 per unit for different categories, it is ₹3.5 to 5.1 per unit in Himachal Pradesh, ₹2.7 to 7.10 in Haryana, ₹ 4.81 to 7.33 per unit in Punjab. Now, the power regulator has imposed 30 paise per unit surcharge for coal washing charges, which, when clubbed with government’s 20% electricity duty, puts Punjab’s average (domestic and industrial) per unit rate at ₹8.
TARIFF HIKE DURING SAD-BJP AND CONGRESS RULE
The power regulator allows review of power tariff annually. The percentage in tariff increase during SAD-BJP regime from 2007 to 2017 was more than what was seen during the current dispensation. The hike under SAD-BJP rule was 22.51% in 2006-07 when compared with 2001-02; 42.13% in 2011-12 over 2006-07; 24.77% in 2016-17 over 2011-12, as against 13.69% in 2019-20 over 2016-17. There were three power rate hikes and 15 fuel cost surcharges were added in the last three years.
WHAT IS IN STORE?
On a letter of cabinet minister Sukhjinder Singh Randhawa, the CM has sought a reply from PSPCL over the controversial points in the PPAS inked during the SAD-BJP tenure. The government has announced to bring white paper on the issue in the monsoon session. The state will witness more political mud-slinging over the issue. The only option to curtail power rate is by rationalising the power subsidy to farmers and passing on the benefits to 87- lakh domestic consumers.