“ONE NATION” – GATHERING A LOT OF “POWER”

about 5 months ago
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One Nation, One Card. One Nation, One Poll. One Nation, One Grid. And now the demand for One Nation, One electricity tariff.

This “One Nation” mantra is really catching on….

It sounds good and so ‘unifying’ but the reality is that these suggested “One Nation” ideas are great to hear and say but very difficult and maybe impossible to implement.

Yesterday, during the Zero Hour in the Parliament, Rajya Sabha MP, Swait Malik of the BJP suggested that the country should go for “One Nation, One electricity tariff.”

His rue was that each state had to pay a different power tariff across India. Malik, who represents Punjab in the Upper House, complained that consumers in his state-paid Rs 8 per unit of electricity, much more than consumers in neighbouring Himachal Pradesh and Jammu and Kashmir. The cost of power in Punjab was forcing the poor to switch off fans even in the summer, and was chasing industrial units out of the state.

Well, what he said is not false; some states in India have very high cost of power. But then what he fails to highlight is that it is not the prerogative of the Govt at the Center to decide on the cost of power; it is a state decision and this is based on the procurement cost of electricity.

In Andhra Pradesh, for consumption between 400 to 500 units, the cost currently stands at Rs.8.05/unit. In Bihar it is at Rs.8.60/unit, Chhattisgarh at Rs.5.5, Chandigarh at Rs.5.20, Daman & Diu is among the lowest at Rs.2.45, Goa is Rs.4, Gujarat is around Rs.5.50, Himachal at Rs.5.40, J&K at Rs.3.20, Kerala is Rs.6.70.

Maharashtra power cost is the highest at Rs.11.05 and Mumbai comes is at Rs.9.29 when supplied by Adani and Rs.11.49 when it comes from Tata Power and BEST power tariff is at Rs.6.13. West Bengal from CESC is at Rs.8.92/unit.

Why does Mumbai charge so much for electricity? Effective 1st April, Maharashtra State Electricity Distribution Company Limited (MSEDCL), which supplies power to over 2.5 crore residential, commercial, and industrial consumers increased the electricity tariff by 6% for every unit. Prior to this, in Sept’18, the cost was increased by 8%.  The MSEDCL is running into losses and the hike was undertaken to recover the losses and to meet the excess power demand. Thus for Mumbai, the demand far outstrips the supply. And to meet this demand, Maharashtra state has entered into various power purchase agreements and tie-ups to import electricity from other states, which automatically pushes up the cost of procurement.

Chhattisgarh has a relatively lower cost of procurement as it generates and uses coal fired thermal power and given that the state itself produces coal, cost is automatically low. On the other hand, Gujarat produces power using imported coal, naturally the cost is high there.

Similarly, states of Uttarakhand and Himachal depend on hydropower and given the water supply in their states, their cost is low.

As one can see, the variance in cost is wide. There is no median which one can arrive at simply because each state uses a different method of power supply and thus cost is different.

Thus the BJP MP probably did not do his homework before posing this question. It all sounds very idealistic; One Nation, One card was relatively easy to work on but the rest……One Nation, More Diversity.

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