Mumbai: Subsidy on power to go

Fadnavis says new financial model for utilities will make electricity cheaper.

Written by ZEESHAN SHAIKH | Mumbai | Published:December 6, 2014 2:20 am

THE Maharashtra government has decided to withdraw the subsidy given to electricity consumers who use less than 300 units per month — a move that will help save the government Rs 706 crore but lead to higher power bills for consumers across the state, barring Mumbai.
Announcing this Friday, Chief Minister Devendra Fadnavis said he had directed power companies to follow a new accounting model that would help them save on the tax on profits.

By adopting this model and through increased use of alternate sources of power in the next couple of years, the state government hopes the per unit cost of power could be lower by Re 1 per unit.

The previous Congress-NCP government had announced a 20 per cent rebate for power consumers in the run-up to the Lok Sabha elections.

The government then earmarked Rs 706 crore every month for this subsidy. Up against the challenge of reining in the state’s huge revenue deficit of Rs 20,000 crore, the BJP-led government is now looking to adopt fiscally prudent measures.

Senior state government officials had advised the state government to withdraw this subsidy.

“As of now, the subsidy is almost gone,” Fadnavis said, adding: “The government is now working on a model which will ensure lower cost of power in the next few years.”

The CM said they took a look at the financial position of power companies and realised that the high profits that they were reporting led to higher taxes.

“We have told them to use better accounting principles that will reduce their tax liability. This money can be ploughed back to reduce the cost of power,” he said.

The government is also hopeful that over the next two years, with increased sourcing of solar power and other alternate sources, the per unit cost of power can be reduced. “By using these models, we can reduce the per unit cost by as much as Re 1,” said Fadnavis.

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