Rajasthan trade bodies flay power duty hike

Trade and industry bodies have criticised the Rajasthan government's decision to hike the electricity duty by 15 paise. Terming the move unjustified, the trade bodies said the hike would hit industrial scenario in the state badly.

Criticising the move, RK Poddar, vice-chairman, the Rajasthan state council of the Confederation of Indian Industry (CII), said instead of raising the duty, the government should have taken steps to reduce transmission and distribution losses. Reduction in transmission losses would have curtailed the need for a hike, he added.

The transmission losses have gone up in the last three years. At 42 per cent, these losses imply that around 11 billion units of energy are lost in the transmission every year.

The three distribution companies, with high accumulated losses, have projected losses aggregating Rs 1,446 crore for 2003-04 in the annual return filed with the Rajasthan Electricity Regulatory Commission.

The state government targets to reduce the transmission and distribution losses to 20 per cent by 2006.

Criticising the move, the PHD Chamber of Commerce and Industry said at a time when the state government was attempting to attract fresh investments, the rise in the electricity duty had come as a retrograde step and would send wrong signals to prospective investors.

It would also hamper competitiveness of the units, particularly those for whom electricity constituted an important part of production cost, it said.

The chamber called upon Chief Minister Vashundhara Raje to review the decision and also demanded abolition of the electricity duty as was done in several states of the northern region.

Poddar said the quality of power was another major issue. Apart from load shedding, the power from the state grid had high voltage fluctuations, which affected industrial production, he added. "To overcome this, most units have generators installed. But this propels the cost of production, which not many units can sustain," Poddar said.