State governments should take liability of electricity subsidies on their balance sheets instead of burdening the distribution companies, Power Minister Jyotiraditya Scindia said Thursday.
"Do not put that (subsidies) liability on the balance sheets of power distribution companies. It should be funded by you (states) on your sovereign balance sheets," Scindia said at a conference here to mark 10 years of the Electricity Act organised by industry chamber FICCI.
Saying the power ministry had no problems with states subsidising electricity to any category of consumers, Scindia also urged the power utilities to restrain from stopping electricity supply to consumers even when electricity is available at reasonable costs from other sources.
"We must move away from such abhorrent practices that leave vast number of consumers in energy poverty," he said.
His comments come in a situation of precarious financial health of state-run distribution companies (discoms).
The government in September last year approved a restructuring package for discoms' debt burden, which stood at a staggering Rs.246,000 crore at end of March 2012.
Under the scheme, 50 percent of the short-term outstanding liabilities would be taken over by state governments, and the balance would be restructured by providing moratorium on principal and best possible terms for repayments.
Five states - Tamil Nadu, Andhra Pradesh, Rajasthan, Haryana and Uttar Pradesh - with total short-term liability of close to Rs.120,000 crorehave committed to the financial restructuring programme (FRP) for discoms.
