MP cuts power cess

The MP government today decided to cut the cess on captive power in Madhya Pradesh. It is likely to be reduced further and will cost the state exchequer Rs 30 crore.

In another decision, the state government has decided to adjust the power bill of farmers who had paid their 5 HP power bill for the period between January 1, 2001, and December 31, 2003.

At present, the state government levies a cess at 20 paise per unit from old captive power plants and 10 paise from power plants set up after 2005 under the Vidyut Upkar Adhiniyam 2005.

"This step has been taken to provide relief to the industry. We are not in a position to provide them with regular power supply and this will be a big relief to them and encourage them to invest in Madhya Pradesh," said NS Tomar, minister for public relations. Across the nation, cess and electricity duties on captive power generation are the highest in Madhya Pradesh.

On farmers' 5 HP power connection the minister said, "The state government will now pay bills worth Rs 1782.55 crore on behalfof farmers (paid during 1 January 2001 and 31 December 2005) to the state electricity board. We are looking for ways and option to cushion this financial burden."

"Industrialists have filed a petition against the cess on captive power in the Jabalpur High Court. If the court's decision goes in their favour, our plan will be to reduce it to zero paise per unit," a senior official of the government told Business Standard.

The state government is likely to review the captive power policy again. Though officials do not have data on captive power generation, according to a business chamber, MP generates about 750 Mw of captive power.

The state Cabinet today also approved an increase in discretionary fund of the state chief minister from existing Rs 2 crore to Rs 9 crore.