Steep hike in power tariff for the industrial sector may hit investor sentiments and adversely impact the MP government's 'Make in Madhya Pradesh' initiative, experts said.
Madhya Pradesh Electricity Regulatory Commission (MPERC) on Friday had announced an average 12% hike for industrial consumers.
"The average tariff hike of 12% will break the backbone of the industry in Madhya Pradesh.
The new tariff order will discourage the industries from sourcing power from outside the state," said Gautam Kothari, the president of Pithampur Audyogik Sangathan.
Others too have similar views. "Power tariff in MP is now on the higher side and there is no reason why a potential investor will not move to another state where input costs are lower," Dewas Industry Association president Ashok Khandelia said.
"The hike in power tariff will have a greater impact on the micro and small industry," he said.
The industrialists have lamented about lack of transparency in power supply and functioning of discoms.
"It will be extremely difficult for power intensive industry such as steel to operate in the state after this revision in tariff," said a steel manufacturer who did not wish to be named.
However, a state industry department official, requesting anonymity, said that power tariff in several states including Maharashtra, Rajasthan, Punjab and Haryana is still higher than that in Madhya Pradesh.
The MP Power Management Company Ltd has justified the hike saying that the coal price had doubled in the last six years.
"Ensuring round-the-clock power supply across the state would need a projected 50,250 million units of electricity for the 2015-16 fiscal. It would cost Rs 5.85/unit," the company said at the time of submitting the proposed tariff to the regulator.