New Telangana govt faces uphill task as power sector faces economic crisis

The new Congress government in Telangana led by chief minister A Revanth Reddy is facing a major challenge in overcoming the financial crisis in the power sector.

The new Congress government in Telangana led by chief minister A Revanth Reddy is facing a major challenge in overcoming the financial crisis in the power sector while seeking to implement free electricity supply up to 200 units to domestic consumers, one of the six guarantees promised by the party during the just-concluded elections.

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Within a day of taking over as the chief minister on Friday, Revanth Reddy held a quick review meeting on power sector to understand how much it would cost the state government to implement the Gruha Jyothy scheme – aimed at supplying 200 units of power per month free of cost to domestic consumers, while ensuring continuous free power supply to agriculture sector.

According to official figures, there are in all 174.03 power connections in the state of which, 125.56 lakh connections, accounting for 72.15% of the total consumers, belong to the domestic sector. “If all the domestic consumers are not charged up to 200 units of power per month, the total burden on the state would be anywhere around ₹4,800 crore,” M Venugopala Rao, an expert in the electricity sector, who regularly appears before the Electricity Regulatory Commission to argue on behalf of consumers.

However, it is not immediately known whether the government wants to restrict the Gruha Jyothy scheme to only those consumers who do not utilise more than 200 units of power per month or it is applicable for all the domestic consumers up to 200 units and billing will be done only for above 200 units of consumption.

“Unless the government comes out with a policy decision, we cannot assess the exact burden on the power utilities. This additional burden has to be reimbursed by the state government every year,” Rao said.

This is easier said than done. During the powerpoint presentation made by the electricity department before the chief minister on Friday, the power distribution companies have already been facing a huge financial burden due to mounting debts to the tune of around ₹81,000 crore, including dues from the state government in the form of subsidy and dues to be paid to the power generating units.

An official from the power sector department said on condition of anonymity that the dues from the state government to Telangana state northern power distribution company ltd (TSNPDCL) and Telangana state southern power distribution company (TSSPDCL) were to the extent of ₹28,140 crore and from the central government around ₹721 crore.

“At the time of formation of Telangana, the dues from the state government to these two power utilities was around 1,268 crore. But they went up steeply year after year due to various lift irrigation schemes, the biggest being Kaleshwaram lift irrigation project (KLIP) and Mission Bhagiratha (supplying drinking water to every household). Even municipalities and municipal corporations, Hyderabad Metro Water Supply and Sewerage Board, have not been paying power bills regularly to the Discoms,” the official quoted said.

During the last annual revenue requirement (ARR) report submitted to the regulatory commission for 2023-24, the Discoms proposed to recover around ₹12,515 crore from power consumers in the name of “True-Up” charges, but the state government did not approve of the same, obviously keeping in view the assembly elections.

“The government told the regulatory commission that it would adjust this amount to the Discoms in instalments in the next five years. Now, the only option before the Discoms to overcome the losses is to increase the power tariff for high-end consumers in the industrial and commercial sector to cross-subsidise the domestic and agriculture power consumers,” energy expert Rao said.

He, however, said even for this cross-subsidisation, the upper limit is only 20 percent. “The Discoms cannot charge in excess of 20 percent on high-end consumers to offset the losses caused due to free power supply to domestic and agriculture power consumers. So, the government has to allocate more funds to bear this additional subsidy,” Rao added.