The directorate of urban development, with the approval of the state cabinet, had decided to regularly deduct a part of the government grants they would receive and pay the amount to the power board, said urban development joint controller (finance) Diwakar Kamal.
Sources said the local bodies owed around Rs. 20 crore to the electricity board, and the issue had been raised repeatedly, but to no avail.
The state government had released grants amounting to Rs. 6.8 crore in the first quarter of the fiscal year, of which Rs. 96.15 lakh were retained by the directorate.
Kamal said the municipalities had been directed to reconcile, failing which the deducted amount would be used to pay the outstanding bills. Similar action could be taken against nagar panchayats, who are yet to receive grants, and municipal corporations as well.