Gujarat farmers may have to pay more for power

With the deadline for eliminating cross-subsidies in power tariff nearing, domestic consumers and farmers of Gujarat Urja Vikas Nigam Limited may have to cough up more money.

However, the Gujarat Electricity Regulatory Commission (GERC) has missed the extended deadline of December 10, 2007, for installing meters for irrigation and agricultural consumers, which would have determined the exact consumption.

According to an RTI application filed by the Consumer Education and Research Society (CERS), by December 2007, only 30 per cent of the agriculture and irrigation section were installed with meters, a five per cent increase from 2005 when the deadline was set.

KK Bajaj, honorary director, CERS, said, "All other states, be it Maharashtra or Haryana, have started eliminating cross-subsidy. If the government here wants to give benefits to farmers, it must raise the subsidy to Rs 2,400 crore or pay for the actual agriculture consumption. As per the guidelines, tariff should be increased gradually to reach plus or minus 20 per cent of the average cost of service by 2012"

Cross-subsidies result in higher tariffs for some categories of consumers who have a perceived 'ability to pay' and according to the National Tariff Policy this has to be eliminated by 2012. The Apellate Tribunal had asked GERC to give a roadmap to reduce cross-subsidy in 2006.

"The process for eliminating cross-subsidy is on and we are taking all necessary steps to ensure it," said a senior official of GERC while accepting that the work of installation of meters in agriculture would take time.

A study carried out on 'Cost of Service' by Feedback Ventures points out that realisation is as low as 0.92 paise per unit for irrigation against its cost of Rs 3.73 per unit. For domestic consumers, the cost of service is Rs 4.59 as compared with realisation of Rs 2.95 per unit. Commercial users balanced all this, where realisation is Rs 4.72 as against the cost of Rs 3.95 per unit.

To adjust fluctuating fuel costs, a fuel and price of power purchase adjustment formula has been approved by GERC.

A multi-year tariff would be introduced from 2008 wherein tariff revision will be considered every three years.