In Punjab, where power has been costliest in the country and “faulty” Power Purchase Agreements (PPAs) are a major political issue, the Aam Aadmi Party-led government has announced 300 units of free power.
The announcement, the biggest of the AAP government so far, was made on Saturday, when it completed one month in office. Besides standing the party in good stead in Punjab, the scheme may also help it in neighbouring Himachal Pradesh, which goes to the polls later this year. It was only a day earlier that Himachal Pradesh Chief Minister Jai Ram Thakur announced 125 free units of power.
It was on June 29 last year that AAP supremo Arvind Kejriwal promised the 73.80 lakh power consumers in Punjab that his party, if voted to power, would provide them with 300 units of free electricity, along the line of a scheme in Delhi, where he is chief minister. Chief Minister Amarinder Singh was then having a tough time in the Punjab Congress, his failure to provide the promised cheap power and terminate PPAs being among the reasons.
The Congress high command constituted a Mallikarjun Kharge-led panel in May 2021. On June 27, the panel submitted to Amarinder an 18-point agenda, one of which was the proposal to give 300 units of free power. Amarinder’s government, however, told the high command that it was not doable.
After Amarinder’s ouster in September 2021, when Charanjit Singh Channi took over as his successor, he slashed the tariff for the first 300 units by Rs 3 for consumers having loads of up to seven kilowatts. The first 100 units of power are being charged at Rs 1.19 per unit for all domestic consumers. Earlier, it was Rs 4.19. After that, consumption between 100 and 300 units was billed at Rs 4 instead of Rs 7 per unit. For more than 300 units, the charges were at Rs 5.76 per unit as against the earlier rate of Rs 8.76. This benefited 69 lakh consumers—everyone except for those who could afford high power bills, according Channi.
However, electricity tariffs are not a new political issue in the state. Sensing that it could be a vote-catcher, former chief minister Parkash Singh Badal gave free farm power during his 1997-2002 stint. It was scoffed at by experts then as a drain on the exchequer. When Amarinder took over as chief minister in 2002, he did away with the subsidy partially. The narrative then turned against Amarinder.
Later, the Opposition Congress blamed PPAs with private thermal plants for the high power prices. The PPAs were said to favour the private players in that the government had to pay them sustenance fees even on off-peak days, when it did not procure power from them.
The burden on the exchequer was being passed on to the consumers. Amarinder had promised that he would do away with PPAs but later said they were such legally sound documents that no government could touch them. This created unease in the Congress itself.
The AAP government now faces the challenge of not only footing the Rs 6,000-crore free power bill but also taking a call on PPAs.