However, the benefit won’t apply to Mumbai

With parliamentary polls round the corner and the Aam Aadmi Party already announcing power rate cuts in Delhi, the Maharashtra Cabinet on Monday decided to reduce electricity tariff by 20 per cent across the State, barring Mumbai.

It plans to implement the tariff cut from February 1. However, the government has to seek the approval of the Maharashtra Electricity Regulatory Commission before the measure can be implemented.

The Cabinet approved tariff cut in all segments, including agricultural, residential, commercial and industrial users. However, the rate cut will apply to residential users who consume less than 300 units a month.

The decision will result in a subsidy burden of Rs. 8,472 crore a year.

Of this, the State government will have to pay a subsidy of Rs. 7,272 crore to compensate the State power utility, Mahadiscom. The power utility will have to bear the remaining Rs. 1,200 crore.

Officials from Mahadiscom informed the Cabinet that the power utility cannot shoulder the subsidy burden if the government did not provide its share on any given month, official sources told The Hindu. The State’s share amounts to Rs. 606 crore a month.

Senior ministers denied the decision was linked to the AAP’s tariff cut.

“The Group of Ministers on reducing power rates was set up over three months ago,” said Industries Minister Narayan Rane. He led the GoM on whose recommendation the Cabinet took the decision. The GoM was initially set up to suggest a reduction in power tariff for industry.

The Opposition dismissed the decision. “The State electricity regulator had levied a surcharge which would end by April and power rates would come down in any case. The State should have reduced rates even further,” said BJP leader Vinod Tawde.

Mumbai Congress MPs Sanjay Nirupam and Priya Dutt had agitated for a reduction in power tariff in Mumbai. “We have been given an assurance that the reduction in Mumbai’s power rates will be considered by the Cabinet at a later date,” Mr Nirupam told The Hindu.