Due to cross-subsidy and the number of agricultural consumers in MSEDCL area, the tariff of MSEDCL is higher than other distribution licensees in Maharashtra. Since cross-subsidy is among the root causes of power woes in Maharashtra, reduction in cross-subsidy is the need of the hour for long-term sustainability, said R B Goenka, Chairman of Energy Cell of Vidarbha Industries Association. Surprisingly, even after low tariff, the arrears of agricultural consumers are increasing because of non-payment and the burden is passed on to other consumers despite the Government providing some portion of subsidy, said Goenka. During his tenure as Director of MSEB Holding Company, Goenka had suggested creation of a separate agricultural distribution licensee, which should be a Government-owned company. In the presentation that Goenka shared with ‘The Hitavada’, he had stated that due to subsidised electricity and non-payment of electricity bills, the agriculture sector became a neglected category and the farmers suffered from rationing and poor quality of electricity. The farmers suffer because of voltage fluctuations, frequent power supply interruptions, and phase imbalances that have hit the rural areas with substantial economic costs. “Therefore, the current system of delivering subsidised electricity to farmers actually imposes substantial economic costs on the farm sector as well,” he explained.

 

According to Goenka, withdrawing power subsidies and bringing tariff of all categories near to cost of supply is mandated in the Electricity Act, 2003. However, he rued, these cannot be achieved unless there is ‘strong will’ to work in this direction. “This seems difficult at this stage due to the fact that political decision-makers will always avoid implementing a rational price regime for power supply to the agricultural sector because it is hugely unpopular,” he added. Based upon his study and thorough understanding of the power sector dynamics, Goenka had suggested creation of a separate Government company for agriculture consumers by the name ‘State Agriculture Consumers Utility’. He expected it to be a ‘transparent, efficient utility’ for delivering power to agriculture sector, which shall offer farmers the subsidies apart from improved service quality as well as incentives to use electricity efficiently.

This would improve operational and financial performance of power utilities apart from rationalising tariff of all other categories of consumers as mandated in the Electricity Act, 2003.

 

Also, it would improve rural power supply without increasing the unsustainable cross-subsidy surcharge burden on consumers in other categories, he observed. Further, he stressed, it would improve the recovery of cost of power from the consumers by the distribution licensees and shall limit the arrears. Also, he had suggested to impose agricultural cess on all the distribution licensees in Maharashtra. The MSEB Holding Company had appreciated Goenka’s presentation and had sent it to the Government for further action. But, on ground the implementation and its results are yet to be seen. Meanwhile, MSEDCL’s tariffs continue to be higher than other distribution licensees in Maharashtra. Goenka made some other suggestions too. According to him, telescopic tariff should be introduced for agricultural consumers too, just as it is done in case of residential category of consumers.

 

The telescopic tariff for agricultural consumers could be in different slabs. Also, he suggested that there should be fuel adjustment cost (FAC) fund for stability, since unstable tariff creates problems. Besides, decentralisation of power should be done. Everything should not be centralised in Mumbai. Though some steps were taken, they are not good enough. “Proper restructuring of MSEDCL should be done,” he said. Also, there has to be a legal committee to review and end frivolous cases and the number of lawyers on the panel also should be reduced, to effect cost saving. He also pitched for passage of the Electricity (Amendment) Bill.