Increase in power tariff in Telangana appears a certainty

Two discoms represent to Government that there will be a deficit of nearly Rs.10,000 crore for 2017-18

Increase in power tariff appears to be an inevitability in Telangana for the next financial year, irrespective of the two power distribution companies (discoms) joining the Ujjwal Discom Assurance Yojana (UDAY) scheme to transfer 75 per cent of their debt burden to the State Government and subsidy provided by the latter.

Revenue deficit

After struggling for nearly two months to work out the least possible hike even after considering the transfer of debt burden and subsidy component, the two power distribution companies have represented to the State Government that there would be huge revenue deficit of nearly Rs.10,000 crore for 2017-18.

The discoms have mainly cited the increased demand from the agriculture sector for the expanded revenue deficit.

Official sources stated that the two distribution companies would have an aggregate revenue requirement of over Rs.32,500 crore with the consumption of energy estimated to increase by about 5,000 million units (MU) during 2017-18 from about 50,000 MU in the current (1016-17) year. It was understood that the discoms had submitted to the State Government that the revenue from sale of energy would leave about Rs.10,000-crore gap even if the tariff was increased by about 9 per cent.

The debt burden of the two discoms together was Rs.11,900 crore when they joined the UDAY scheme by entering into an agreement with the Union Power Ministry in January first week. As a result of joining the scheme, over Rs.8,900 crore debt of the two discoms would be taken over by the State Government leaving a Rs.3,000-crore debt on the two utilities.

Considering the requirement of revenue and the possibility of provision of subsidy of about Rs.5,000 crore in the coming budget by the State Government, the discoms would be left with no choice but to increase the power tariff for 2017-18 or continue to remain in debt even after joining UDAY scheme, the sources stated.

Only relief

“The only relief to the discoms as well as consumers will be the relief of Rs.890 crore debt servicing met by them annually. The remaining revenue deficit will have to be plugged by the State Government through provision of subsidy or from tariff hike”, a senior official of the power utilities explained.

Meanwhile, the Telangana State Electricity Regulatory Commission asked the discoms to file their tariff proposals by February 23 or else they would take up the task on their own.