Close on the heels of the Aam Aadmi Party’s promise to halve power tariffs in Delhi, the Maharashtra government is considering slashing electricity rates in the State by 10 to 20 per cent. The recommendation has been made by a group of ministers (GOM) headed by Industries Minister Narayan Rane. A final decision is expected next week, and will also need approval from the State electricity regulator.

“Power tariffs have gone up in all spheres. So we have recommended a 10-20 per cent cut for agricultural, industrial, commercial and residential consumers across the State,” Mr Rane told The Hindu. The GOM was initially set up to lower industrial tariffs which are at least Rs.2 higher than neighbouring States.

The tariff cut will result in a hefty subsidy burden on the State government, which will have to compensate power suppliers. The bulk of Maharashtra gets power from State power utility Mahavitaran.

A tariff cut of 20 per cent will result in an annual subsidy burden of Rs.6,000 crore. Of this, the State will bear Rs.5,000 crore and Mahavitaran will have to put in Rs.1,000 crore. A tariff cut of 10 per cent will result in an annual subsidy burden of Rs.1,700 crore. Of this, the State will have to bear Rs.1,200 crore and Mahavitaran will have to put in Rs.500 crore, the GoM has recommended.

This excludes the costs the State will have to bear for cutting electricity rates in Mumbai. The financial capital gets power from State utility BEST and Tata Power Company and Reliance Energy.

Mr. Rane denied that the government’s move was linked to the approaching elections or AAP’s policy. “The GOM was set up over three months ago. The decision has nothing to do with AAP’s plans in Delhi,” he said.

However, last week, Congress MP Sanjay Nirupam had demanded that the State government reduce power tariffs in the city as was being done in Delhi. He has even threatened to launch an agitation by January 13 if rates are not reduced.

Sources within Mahavitaran say a tariff cut could have a negative long-term impact. “Instead of investing money in power plants to generate more power, the subsidy will go to consumers. This is a short-sighted approach. Also, this could have a negative impact on overall pricing,” officials said.