UP elections: Free electricity promises in the era of power reforms

From Agra to Etawah to Mainpuri, which was the bastion of Mulayam Singh Yadav, for years, rural consumers are content with domestic electricity supply of 12-18 hours

Jitendra Kumar, a farmer in Makhanpur village, Karhal, is hopeful that if voted to power, Samajwadi Party chief Akhilesh Yadav will give farmers like him free electricity.

Yadav is fighting election for the first time from Karhal. His party’s manifesto says there will be a door-to-door campaign to provide 300 units of free electricity to domestic consumers.

“We are receiving only 12 hours’ electricity a day. We pay heavy tubewell bills of around Rs 2,200 a month. We are hopeful that Akhilesh Yadav will do some good for us,” said Jitendra Kumar.

From Agra to Etawah to Mainpuri, which was the bastion of Mulayam Singh Yadav, Akhilesh’s father, for years, rural consumers are content with domestic electricity supply of 12-18 hours. The worrying part is the erratic supply to farm areas and the high bill for running irrigation pumps and tubewells.
 

Speaking in Mainpuri, Union Home Minister Amit Shah last week promised free power to farmers for five years, within five days of the BJP returning to power in UP. This promise comes at a time when the BJP-ruled Central government has initiated reforms in the power distribution segment, where the top priority is putting a stop to the subsidy-loss vortex of power distribution companies (discoms). The Union Budget 2021 announced a Rs 3-trillion discom reforms scheme. This came after the Centre’s first reform scheme UDAY concluded in 2020 with limited success.

Power Minister R K Singh in Jan­uary commented on parties promising free electricity, saying “politicisation of the sector is disastrous”. “If you convert electricity into goods which you are going to distribute for free and you don’t have the capacity to pay for it, the country will go into the dark. Somebody has to pay for power. If the state government doesn’t want the consumers to pay, then they have to pay from their budget. And if their budget doesn’t allow it, they have no right to declare subsidies which they can’t pay for,” he said at a Confederation of Indian Industry Conference on Smart Metering on January 27.

The concern of the power minister seems to be true for many states, especially UP, where three out of five of its discoms are in the red. Overall, the loss of the state’s power distribution sector stands at Rs 6,610 crore. Its operational loss or AT&C loss is at 31 per cent, higher than the national average.

When a discom has to provide electricity to a certain consumer category at subsidised rates or for free, the cost is passed on to other categories, mostly industry. In UP, a similar story is being played out. The electricity tariff in the agriculture segment is Rs 2.9 per unit, while the commercial and industrial tariff stands at Rs 12.4 per unit, the highest in the country, showed the data compiled by the Union Ministry of Power. The average domestic tariff in the state is Rs 6.3 per unit, again a high-tariff category.

While the electricity tariff is low, agriculture consumers in the state face erratic power supply, which means additional spending on diesel for running gensets. Across Western UP, farmers say while their home bills are economical, spending on the field is costlier. “Most people do not have meters. Meters cost more than the fixed amount we pay without it. We pay Rs 20,000-25,000 yearly,” said Chandarbhan, a farmer from Donkeli village in Firozabad district.

Due to financial stress, the state’s discoms owe Rs 9,760 crore to power generating companies as of Februa­ry. The state took a step towards privatising one of its discoms in 2020 but shelved the plan later.

The discoms have one of the highest AT&C (aggregate technical and commercial) losses, which have risen in the past couple of years, and are under financial duress. The state’s departments have bills to settle.