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Power reforms pay-off in five years

Mumbai, Sept. 26: The government has promised benefits of reforms in the power sector within five years.

Minister of state for power Jayawanti Mehta said here today that teething problems would be encountered in the initial phase, but would peter out soon. She was referring to the spat between BSES and Tata Power over undercutting in energy prices to woo customers.

The new Electricity Act, now in force, makes states as responsible for implementing reforms as the Centre. She urged states to co-operate in the process, and held up Maharashtra, Gujarat and Haryana as examples.

Rebutting arguments that reforms would mean higher prices for consumers, the minister pointed out that annual transmission and distribution (T&D) losses in the power sector stood at a whopping Rs 33,000 crore. Power thefts account for another Rs 22,000 crore. If these were plugged, state electricity boards will be richer by Rs 55,000 crore. “These recoveries made could easily be passed on to consumers,” she added.

She lamented the fact that several state governments cloak concessions lavished on agriculture in T&D losses. The minister said the results of populist measures would return to haunt them later.

She cited Madhya Pradesh’s plan to waive electricity charges of Rs 800 crore to the poor as a case of just how states should not be using energy for electoral gains. A state that has 1500 mw less than its power requirement, she said, cannot afford to go that way.

“The new government in Madhya Pradesh after the elections will pay for its predecessor’s extravagance,” she said. She also said the new act will ensure that cross subsidies are done away with. Globally, energy rates are the lowest for industry, with the charges for the farm sector and households a trifle more than others.

In India, Mehta said, the scenario is just the opposite. Households pay the least for electricity, while industries billed at the highest tariffs. “There is a pressing need to remove this anomaly,” the minister added.

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