Hike will help tide financial crisis, says Mahavitaran

After tariff hikes of Rs 11,000, power distributor Mahavitaran proposes Rs 10,800 crore hike to help it overcome its financial crisis.

State power distribution company Mahavitaran has justified its proposal for a tariff hike of Rs 10,800 crore for this year saying that the extra revenue will save it from imminent financial doom. Consumers across the state are up in arms against the company’s demand, because there have already been tariff hikes of about Rs 11,000 crore in the past two years. They say the distribution and generation companies are inefficient and lack planning.

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Defending its demand, Mahavitaran, India’s largest power distribution utility with more than 2 crore consumers, has blamed the Maharashtra Electricity Regulatory Commission (MERC) for the financial mess. In a presentation given to MERC, the company has pointed out that it accumulated huge losses and arrears because the regulator did not allow it to recover the money periodically. A copy of this presentation is available with HT.

Mahavitaran has proposed a massive 45% hike for domestic consumers who use up to 100 units per month. Over half of its consumers - 1.2 crore of the 2 crore - are in this category. The distributor caters to the city’s eastern suburbs, Thane, Navi Mumbai, and the rest of Maharashtra.

The company has justified the proposal to hike domestic charges. “Industrial consumers pay more in monthly bills to cross-subsidise consumers in the lower segment.

Hence they have been threatening to move out of the state, citing expensive tariff. We cannot continue to tax them more because the state’s economy would take a beating if they shift shop to other states,” a senior company official who did not wish t be named told HT a day after consumers’ association charged it with inefficiency. “There is a remarkable improvement in our operational efficiency. Bill collection efficiency is almost 98% and our distribution losses have reduced drastically as well,” he said.