Congress, NCP divided over power rates in Mumbai

Congress ally NCP totally against govt shelling out subsidy amount

The Maharashtra Cabinet on Wednesday failed to take a decision on reduction in power tariff for Mumbai consumers, as ruling ruling coalition partners, the Congress and Nationalist Congress Party (NCP), were divided over the issue of providing subsidy to private distributors — Tata Power and Reliance Infrastructure (R-Infra) — to enable them to reduce tariff.

A section of Congress leaders, including MP Sanjay Nirupam, who had staged a hunger strike demanding tariff cut, has been strongly stressing on the need for a government subsidy. However, NCP is against the government spending money on subsidy. This is especially when the government will have to provide Rs 7,272 crore annually to MahaVitaran to make up for its loss due to 20 per cent cut in tariff of 21.4 million consumers.

Although both the parties are in favour of reduction in tariff, there is no consensus on methods.

A senior Congress minister, who did not want to be identified, told Business Standard: “Mumbai is a unique example, where private sector is largely responsible for power distribution. However, we will have to take a call politically to compensate these private utilities for the loss owing to tariff reduction. A rough estimate suggests that the government may have to shell out anywhere between Rs 300 and Rs 2,000 crore annually.” The minister admitted such a subsidy to private utilities will be first of its kind in the state.

On the other hand, a NCP minister said in the run-up to the elections the coalition might attract criticism especially from rural voters who get supply from the state-run MahaVitaran.

He asked the companies to approach the Maharashtra Electricity Regulatory Commission with a plea to revise certain charges, including wheeling charge, regulatory assets charge and cross subsidy charge to cut their tariff.

Meanwhile, Chief Minister Prithviraj Chavan said his government was in favour of tariff cut for Mumbai consumers with monthly consumption of  up to 500 units. “However, the government is currently exploring various options in this regard. The government is also examining issue of ordering an audit of these companies,” he noted.