Ahead of the Assembly elections due later this year, the Congress ruled Delhi Government may have extended the olive branch to the consumers by offering a subsidy on their power bills, but in doing so, it has pushed the city’s power generation companies (gencos) further towards closure.

Instead of working out a bailout package for the five generation companies that are on the verge of shutting down, the Delhi Government announced a subsidy for the consumers, which is unprecedented — for a hike of what would have been 50 paise per unit, the government gave a subsidy of 80 paise per unit.

Gencos and the city’s power utility, the Delhi Transco, on the other hand are facing a severe cash crunch because discoms BRPL and BYPL have not paid their dues and there has been no largesse from the government in the form of a bailout package.

The Hindu had first reported in July that the gencos had asked for setting up of an ESCROW account to park the revenue of the discoms so that payment due to the power generators could not be withheld by the private companies.

Sources in the Power Department said the gencos cannot generate any more power and a lockdown is expected anytime next week, unless money comes in. “The companies have been somehow managing generation, but now it has become totally untenable. Unless money is sanctioned in the next few days, the companies have no option but to shut down,” said a source.

As on date, the discoms BRPL and BYPL owe Rs.2,700 crore to the gencos, BPTS, Raj Ghat, Bawana, Gas Turbine and Pragati and Rs.700 crore to Delhi Transco Limited.

On July 2, the Delhi Electricity Regulatory Commission announced the new tariff structure for the city for the year 2013-14 that allowed a five per cent hike in power tariff across the board for all consumers. And even before the news of the hike could reach the consumers – already piqued by the high costs of power – the Delhi Government rushed in announcing an unprecedented subsidy — the government offered to pay on behalf of even those consumers who do not qualify as poorer sections.

Apart from a Re.1 subsidy for the lowest consumption bracket of 0-200 units, the government has announced extending subsidy to those who consumed between 200-401 units as well.

What was perhaps good politics has turned out to be poor economics, as the subsidy will put an additional burden of between Rs.550 to Rs.600 crore on the exchequer.

The government’s decision is also a turn around from its earlier stand of asserting that power tariffs in the city are not high and that privatisation of the distribution sector has been a success story.

“The move to announce a subsidy is just a sop ahead of the elections. The focus should have been on bringing money into the system, not adding to the government’s spending,” said the source. And what could be done with the Rs.550-600 crore that is now being spent on subsidy? “It would have been enough to address the problem of open defecation in the city. At least 40 per cent of the total slums do not have proper toilets as on date,” the source said.

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