The Hindu : Flat rate proposed for farm supply

Online edition of India's National Newspaper
Wednesday, Oct 02, 2002

Southern States

Southern States - Tamil Nadu

Flat rate proposed for farm supply

By T. Ramakrishnan

CHENNAI OCT. 1. In a State where the free power supply scheme has been an important element of the agenda of the political class, yet another attempt is being made to scrap it.

As per a Tamil Nadu Electricity Board proposal given to the State Electricity Regulatory Commission, a rate of 50 paise/unit or a flat charge of Rs. 600 per horsepower per annum is to be charged for agriculturists, and 50 paise/unit or Rs. 10 per month for hut services.

This is an important aspect of the TNEB's proposals, suggesting the lifting of free power supply for hut services too and imposition of an across-the-board 30 per cent hike for the domestic category consuming up to 600 units in two months. Exactly 10 years ago, during the previous tenure of the AIADMK regime, a flat rate of Rs. 100 per hp per annum was prescribed for big farmers (who own more than five acres of dry land or 2.5 acres of wet land). But the move was withdrawn following strong political opposition.

Since then, the losses of the TNEB have gone up. As per an official estimate, the revenue loss on account of the free power supply for the current year comes to about Rs. 3,000 crores and the Government gives only Rs. 250 crores every year. To cross-subsidise this loss, the Government has been shifting the tariff burden to industry. But, now the administration feels that a saturation point has been reached and any significant increase will render industry uncompetitive and it will only send out a wrong signal to potential investors. "This is why we now have turned to the domestic segment, which, in our assessment, is highly subsidised", says a TNEB official.

Barring the consumption slabs of 601 units and more in two months, the proposed increase for all slabs hovers around 30 per cent. About three-fourths of the total domestic consumers, approximately 75 lakhs, come under these slabs, which are sought to be covered by a 30 per cent hike.

Last year too when the Government effected the tariff hike (at that time, the SERC remained headless), its target was domestic consumers, who had to bear the brunt in the range of 25 to 60 per cent.Even if the proposed revision comes into force fully, the TNEB says, the subsidy element for the domestic category will be around Rs. 700 crores. Against the average unit cost of Rs. 3.30, the realisation from the domestic consumers now is Rs. 1.87 and in the event of the board proposal getting cleared, it will be about Rs. 2.40.

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