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LATEST NEWS UPDATES | CM Arvind Kejriwal keeps another promise, cuts power bills 50% by raising subsidy -Richi Verma

CM Arvind Kejriwal keeps another promise, cuts power bills 50% by raising subsidy -Richi Verma

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published Published on Jan 1, 2014   modified Modified on Jan 1, 2014
-The Times of India


NEW DELHI: Moving at a feverish pitch to fulfill the second most important of his poll promises, chief minister Arvind Kejriwal gave 80% of the capital's electricity consumers cause to ring in the new year with much cheer. They will be paying half of what they had to pay so far with the tariff for consumption up to 400 units a month slashed by 50%, thanks to a revision in subsidy. This will apply from January 1 to March 31, 2014, and reviewed once CAG completes its audit of the three private discoms, ordered on Tuesday by Delhi government. That will lead to a genuine reduction in tariff hopes the government.

Months of speculation about how Kejriwal would deliver on his poll promise ended when the CM, after a cabinet meeting, made the surprise announcement of increasing the subsidy. "We met the CAG chief today and are trying for an audit all three private discoms. But, as per provisions of law, the three companies have been given the opportunity of filing their objections till Wednesday. Delhi government is of the view that audit of these companies can be done," said Kejriwal.

But, having said that he was working on a timeline of 48 hours because he wasn't sure if his government would survive, Kejriwal announced the subsidy. "Till the audit report is done, in order to provide relief to middle-class consumers, the government will give a subsidy for reducing the tariff by 50% in the slabs of 0-200 units and 201-400 units. We are confident that once the CAG report is submitted, the subsidy will not be required."

The chief minister said that on paper the subsidy will cost the government about Rs 200 crore for the quarter ending March 31, but in reality the government would bear only Rs 61 crore of the cost which would be paid to Tata Power Delhi. The remaining Rs 139 crore will be adjusted against the Rs 4,000cr plus which the BSES discoms owe to Delhi government's generation and transmission companies. He said the discoms would be directed to bill consumers according to the government decision with effect from January 1, 2014, onwards.

He claimed the government will achieve two objectives - lowering of tariff as well as securing the pending dues of IPGCL/PPCL and Delhi Transco. It was a win-win situation for both consumers as well as Delhi government, he said.

Industry experts, however, argue that the entire subsidy cost to be borne by the government would be about Rs 1,400 crore a year. "One has to see the whole picture. Delhi government is already paying Rs 570 crore a year for the current subsidy against the 0-200 and 200-400 units slabs. The additional subsidy would amount to Rs 800 crore a year. The BSES discoms have said in the past that they are not in a position to pay their outstanding dues to Transco, IPGCL or PPCL. In effect, the government is taking the taxpayers' money in the form of a subsidy and giving it to the BSES discoms to help clear their dues," said an expert. Others said the move would signal further problems for the government. "This is not healthy for the public or the power sector and it encourages higher consumption. The reason discoms are in losses is because they were not granted an adequate tariff hike by the regulator and their losses have since gone up," said former principle power secretary Shakti Sinha.

Kejriwal said the new rates will benefit about 28 lakh out of the 34 lakh power consumers in the city. Those who consume up to 200 units will pay Rs 1.95/unit. The new rate for consumption from 201-400 units will be Rs 2.95/unit. No subsidy would be extended to those who consume power over 400 units a month.

Questioned about his long-term plans and the government's direct intervention in something that's clearly the DERC's area, Kejriwal said: "The audit of discom accounts has been widely demanded by Delhiites for years. I have attended public hearings where people have insisted that a CAG audit of the private discoms be done. The high court has never ordered a stay on a CAG audit...it was nothing but a lie. The discoms have never been audited before and this is a long-term move on our part."

Sources said the discoms were likely to object to any CAG audit, but all three companies declined to comment on the issue, saying they would submit their answers by Wednesday. "Our accounts are regularly audited by reputed CAG-empanelled auditors. These are also approved by the board of the company which has government nominees. When the Delhi discoms were privatized in 2002, CAG - vide letter dated July 1, 2002, had said that the discoms are not government entities under Section 617 of Companies Act, 1956 and hence are out of the CAG ambit," claimed some discom officials, who didn't wish to be quoted. They added that 100% bulk power was procured from government-owned companies which are audited by CAG, and, hence, 85% of expenses are indirectly under CAG domain since 2002.

 


The Times of India, 1 January, 2014, http://timesofindia.indiatimes.com/city/delhi/CM-Arvind-Kejriwal-keeps-another-promise-cuts-power-bills-50-by-raising-subsidy/articleshow/28203217.cms


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