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Web Exclusive | May 2013

Minister asks states to take the burden of free power

Union Power Minister Jyotiraditya Scindia asked state governments to bear the burden of free power or subsidised power instead of passing it to the power distribution companies.

Speaking to a news agency, he said free or cheaper power should become a subsidy item in the state government's balance sheet, and not on the discom's balance sheet, which today is not the case.

He pointed out that states don't compensate the losses suffered by the discoms in distributing free or cheap power and in the end it is the discom that suffers. This is the problem, he remarked.

While Scindia did not specifically name any state, the governments have announced plans for or are already providing electricity free of cost or at lower rates to certain sections of the society, such as farmers.

It may be noted that most distribution companies face financial crisis and the centre's Rs 1.9 lakh crore debt restructuring package for these entities is facing roadblocks owing to certain reservations expressed by some states.

In an apparent reference that states need to do more in the power sector, Scindia said there is also the issue of cross subsidy.

What is happening is that if state is not able to compensate the discoms for some free power given to one section, they ask the discoms to hike the tariff for another segment to compensate for the subsidy burden, he pointed out.

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