VIJAYAWADA: The power tariff policy reforms announced for Union Territories by Union Finance Minister Nirmala Sitharaman as a part of the Aatmanirbhar Bharat Abhiyan can be seen as a prelude to the reforms being extended to all the States. The direct benefit transfer (DBT) of subsidies announced for UTs by the Centre is a part of the Electricity (amendment) Bill, 2020, which draws opposition from several States.
While the tariff policy reforms, the Centre said, would empower the consumers by making power distribution companies (discoms) accountable, the power utilities of States will have to carefully tread the path if and when the said bill is passed in Parliament or an ordinance is issued by the Centre. The DBT of subsidies has been announced to make the power sector sustainable and also as a part of other reforms to bring down cross subsidies and streamline the financial payments and collections of discoms. One argument is that the Centre is testing waters by implementing it in the discoms in UTs, which are under its ambit.
“That way, the resistance from various States may subside as the States could see the results in UTs at the time the policy is implemented. The consumers will realise the benefits of DBT and the discoms will understand the cost to serve and work on reducing the expenditure by improving standards of service,” a senior official said, adding that the reforms were in the offing and under discussion for a while now.
The issue of DBT of subsidies had come up during a review meeting held by Chief Minister YS Jagan Mohan Reddy earlier this month, in which the officials were of the view that though DBT of subsidy was a progressive move, the utilities need to proceed cautiously.
“We need to proceed cautiously for five years or so as it may be difficult financially for the State government to pay subsidies upfront,” another official explained. For the record, the State government has committed to `11,311 crore worth yearly power subsidies to various categories, effectively making the monthly subsidy outgo of `943 crore. Till now, the government has been releasing money to the cash-strapped and debt-ridden discoms as and when it has money. There are about `3,500 crore subsidy dues to be cleared even now.
Since the DBT would mean paying the beneficiaries upfront, like in the case of LPG subsidy, the government has to optimise its financial resources, the officials observed. The Union Ministry of Power has given time for the stakeholders to submit its views/objections regarding the drat Electricity (amendment) Act, 2020, on or before June 5.
DBT of subsidies
DBT of subsidies is a part of the Electricity (amendment) Bill, 2020, which draws opposition from several StatesDBT has been announced to make the power sector sustainableState officials are of the view that it will be difficult to pay subsidies upfront Since DBT means paying beneficiaries upfront, the govt has to optimise its financial resources, say officials