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Maharashtra mulls reduction in power tariff, CM says not influenced by AAP
Thursday January 2, 2014 7:52 AM, & Agencies

Maharashtra Chief Minister Prithviraj Chavan Wednesday admitted that the electricity tariff in the state is on the higher side and his government is considering a reduction very soon. At the same time, Chavan said the development has nothing to do with the Delhi's Aam Admi Party (AAP) government's decision to slash power tariff by half.

The Chief Minister said that the government had formed a committee headed by Industry Minister Narayan Rane to look into the possibilities to reduce the tariff cut. He said the committee had submitted its report and a decision on reducing the electricity tariff may be taken "very soon".

Chavan's statement came in response to a letter written by Sanjay Nirupam, a Congress Member of Parliament from North Mumbai, asking the government to go the AAP way ahead of the Lok Sabha elections.

Nirupam has demanded a reduction in rates for those consuming less than 500 units a month in Mumbai. He also demanded an enquiry on the cost structure and pricing mechanism adopted by the city's power distribution firms.

Besides, the powerloom weavers already hit by the economic slowdown, are also protesting against the power tariff since September. In fact the Narayan Rane committee was formed after a massive protest and shutdown calls by major textile clusters of the state including Bhiwandi, Malegaon and Ichalkaranji.

The state government in its 2012 Nagpur session had promised to provide the weavers electricty on a subsidised rate of Rs.1.80 per unit. The cabinet however did not endorse the decision. The MERC once again hiked the tariff by about 40% to compensate its losses.

The major private power distributors in Mumbai are Reliance Infrastructure (consumer base of 2.8 million) and Tata Power (0.43 million). In addition, BrihanMumbai Electric Supply & Transport (BEST), part of the BrihanMumbai Corporation, and the state-run Maharashtra State Electricity Distribution Company, or MahaVitaran, also distribute power in certain areas.

Former Central Electricity Regulatory Commission chairman, Pramod Deo, told Business Standard: "If the Maharashtra government wants a uniform rate in Mumbai or decides to subsidise certain categories, the respective distribution players will have to be paid the difference upfront.

"Under the Electricity Act, 2003, the state government might decide to subsidise any category of consumers by paying the difference between the rate determined by the state regulator and the one the government desires. It is immaterial whether the distribution company is wholly owned by the government or is a private one."

Meanwhile, Maharashtra Power Secretary Ajoy Mehta said any decision on the power rate in Mumbai should not impact 24x7 power supply in the city and its status as the financial capital of India.

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