Imagine a situation where, say, Punjab says the wheat grown in the state can only be sold within its boundaries. Or where Haryana says a cess of 1% will be put on the sales of all Maruti cars produced in Gurgaon/Manesar when they are sold in other states, to meet an environmental damage mitigation fund. Any such move would immediately attract the Centre?s wrath, and rightly so, but that?s precisely what is happening in the power sector, and not for the first time either.
Several years ago, Orissa?s state-owned power utilities were selling power at lower rates within the state and selling it at 3-4 times that in neighbouring ones?the profits from the latter were, in turn, used to subsidise power sales within the state. When this was challenged at the central electricity regulator as well as tribunal, the law was tweaked to prevent this. Yet, the states are back to working on another version of this. Orissa, for example, has asked private project developers with coal blocks within the state to make between 7% and 12% of generated power available to the state at variable cost, thereby placing the burden of the fixed costs?and higher tariffs?on consumers in other states. Coal-rich states are curbing power supplies to others. Chhattisgarh has said that power produced in the state can only be sold outside the state after its needs are met. Orissa also levies a 6-paise cess on each unit of energy sold outside the state, for its energy management fund. The central electricity regulator
has asked the Centre to help sort out things?at stake is not just the power sector, but the very idea of a common Indian market.