State's commitment may touch a whopping Rs. 5,000 crore

The State government's commitment towards power subsidy is likely to touch a whopping amount of Rs. 5,000 crore during this fiscal due to the directions it had issued to the AP Electricity Regulatory Commission (APERC) and the continuing shortages that will force the AP Transco to make purchases from outside sources.

Tatkal scheme

Invoking Section 108 of the Electricity Act of 2003, the government directed the Commission to spare the consumers coming under the slab of 201 to 300 units per month in the domestic sector and certain other categories of consumers such as cottage industries from any tariff hike.

It also asked the commission to abolish the “tatkal scheme” under which farmers, not covered by free power supply, used to get power connection for their pumpsets out of turn, on the condition that they would pay all the normal charges, besides bills for the metered consumption.

Additional expenditure

As the government issued these directions with the assurance that it would release subsidy to the power utilities against the revenue loss, an additional financial burden of Rs.65 crore has been placed on the exchequer.

The cost of the additional power purchases by the power utilities from external sources to meet the shortage during the year is estimated at Rs.1,000 crore and this will add to the government's commitment to the sector as a whole.

These days, the AP Transco is purchasing nearly 20 mu daily from different traders to supply 255 mu to all categories of consumers.

Financial crunch

The total government commitment towards the sector will reach Rs.6,045 crore when this burden is added to the allocation made to this sector in the budget — that is Rs.4,980 crore.

Whether or not the government will be able to meet this commitment under the present financial crunch is the billion dollar question.

An AP Transco official said the State government had already failed to make releases towards the subsidy promised for the 2010-11 fiscal.

  • AP Transco may be forced to make purchases from outside sources
  • APERC asked to abolish the “tatkal scheme” offered to farmers