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Will Kejriwal act upon CAG report on power tariff?

The Comptroller and Auditor General’s findings about DISCOMs distributing power in Delhi await Delhi Government’s response, writes Abhinav Raj since this opens a way to benefit the consumer

Abhinav Raj
Publish Date: Nov 13 2015 7:27PM | Updated Date: Nov 15 2015 4:55PM

Will Kejriwal act upon CAG report on power tariff?photo by hrishikesh bhatt

Earlier this year, the Comptroller and Auditor General (CAG) pointed out that the national Capital’s three private power distribution companies -- Tata Power Delhi Distribution Limited (TPDDL), BSES Rajdhani (BRPL) and BSES Yamuna Power (BYPL) -- inflated their regulatory assets to the detriment of consumers. As per the Government’s watchdog, the three DISCOMs inflated their regulatory assets to the tune of around Rs 8,000 crore.  It also said that there was a scope for reduction of power tariff in Delhi.


Following the CAG’s report, Delhi Congress chief Ajay Makan wrote a letter to Delhi Chief Minister Arvind Kejriwal asking for a probe by a sitting High Court judge.  Besides this, he asked Kejriwal to appoint a Lokpal to take the cognizance of the findings of the CAG. In this context, he also asked the AAP leader to stop giving Rs 2,000 crore annually to DISCOMs in the form of subsidy as that amount could be used for other development projects.


Following AAP’s landslide victory in Assembly polls in February this year, the Kejriwal Government decided to give subsidy on consumption up to 400 units for domestic usage in order to benefit about 36 lakh domestic power consumers of Delhi.


As per this move by the Government consumption of power from 0-200 costs Rs 2 a unit, while it is Rs 2.97 a unit in the 201-400 slab. The rate for 401-800 slab remains at Rs 7.30 per unit. However, if consumption crosses 400 units, then full charges from zero-base will have to be paid.


After the CAG’s report, it was expected that the incumbent Government would reduce the electricity tariff, but it is yet to provide relief to consumers in accordance with the public watchdog’s suggestion.


Regressive populist step


Moreover, under the budgetary allocation, planned head has been reduced by Rs 1,350 crore, while non-planned head has been increased by Rs 2,500 crore and it has not gone down well with opposition parties who feel the Government is resorting to regressive populist measures.


They have also slammed the AAP Government for allocating Rs 526 crore for information and publicity which was just Rs 24 crore last year. In the meanwhile, Deputy Chief Minister Manish Sisodia said that nearly 40 percent of the planned budget for the current financial year remained unutilised, and the revenue collection of the Government too declined, triggering a fear that the Delhi Government may reduce the planned outlay for the next year.


BJP’s Vijendra Gupta expressed grave concern over this while saying, “reducing the planned expenditure will slow down the infrastructure projects. The ongoing projects will be stalled and no new projects will come up in the next year. At the same time, establishment expenditure will go up, which will put burden on the taxpayers. The vote-on account also does not suggest any way to overcome the financial deficit.”


Escalating deficit


Another worrisome factor is escalating fiscal deficit. The fiscal deficit in the year 2012-13 was around Rs 2,900 crore, and in the year 2013-14 this was around Rs 2,000 crore. Instead of showing financial prudence, the Delhi Government has focused on regressive populist measures. The Government will spend at least Rs 1,400 crore to provide fifty percent subsidy to consumers in Delhi. Till date Rs 700 crore has been given to Tata Power and the Reliance led BSES for this purpose.  If a senior official from the department of power is to be believed, this subsidy amount will increase to Rs 1,800 crore in the next fiscal as power tariff will further increase due to increase in coal prices. The Delhi Government will spend approximately about Rs 9,000 crore in the next five years to ensure fifty percent subsidy to Delhiites and secure political mileage.


In view of this, Delhi Government’s minister Satyendra Jain had said that the Government would set up its own power plant. "No one is giving us cheap electricity. So we will start producing our own power at Rs 2.50-3 per unit. At present, coal blocks are available at Odisha or Jharkhand," Satyendra Jain said on the sidelines of a conference in New Delhi. However, the Delhi Government has now put this plan on hold, saying the national Capital has surplus power and an additional thermal plant wouldn’t be required. 

Before Elections, Arvind Kejriwal said that electricity companies have fudged their balance sheets by showing losses. Now on the basis of the same balance sheets electricity companies approached the Appellate Tribunal for Electricity for increasing tariff in Delhi. The DISCOMs have said that their power purchase cost (i.e. the cost of raw power they buy from generating companies) should be adjusted by increasing electricity tariff in Delhi. On 27th May, 2014 the Appellate Tribunal accepted the plea of the DISCOMs. This decision will have ramification to the extent that electricity in Delhi can witness a tariff increase of up to 20 percent.


Surprisingly, this decision has not been challenged by the Kejriwal Government in the Supreme Court.


While in opposition (01.02.2013) Arvind Kejriwal said that each of the 3 power companies make a profit of more than 3,000 crores per year and they are hand in glove with the Government.


However, post AAP’s massive victory, no action has been taken against the companies, and it has left many shocked as Kejriwal is seen going soft on the DISDOMs.


The Aam Aadmi Party in the Bijli Pani white paper that they floated during the 2015 Delhi Elections said that the capital cost incurred by the DISCOMs has been artificially hiked.  However, the AAP has failed to tackle this issue and the DISCOMs have taken the benefit of this in the court. Consequently, the people of Delhi will have to bear the burden if the decision is not immediately challenged before the Supreme Court.