Pehle AAP

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SummaryHaryana becomes the first state to follow Delhi in cutting power tariffs with no good reason

On the face of things, like Delhi’s reduction in power tariffs for a certain section of the population, Haryana’s R600 crore relief will also be funded from the state’s budget—agriculture tariffs have been lowered to just 10 paise per unit from the meagre 25 paise and domestic tariffs rolled back to April 2013 levels for those consuming up to 500 units a month. To that extent, it does not affect the state’s commitments to restructure its debt-ridden power utilities. The problem, however, is two-fold. One, how fast, and how far, will the AAP’s populism virus spread. Two, what does this do to the long road ahead for Haryana when it comes to cleaning up its power sector?

While the state hiked tariffs in FY11, it did so after a decade; there was a negligible hike the next year and 18% in FY13. The FY14 hike has largely been rolled back for certain categories of customers. Given the gap between costs and supplies is still very high—over one rupee per unit—the state still has large hikes to make. For one, the ‘regulatory assets’ of R2,700 crore still need to be discharged—that adds up to around 86 paise per unit of power that needs to be recovered—and accumulated losses of the various power utilities in the state added up to over R10,000 crore in FY12 as compared to

R6,300 crore in FY11. For a state whose electricity sector remains in the ICU, following the AAP example is a remarkable act of bravado.

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