Bengal in Catch-22 on power subsidy issue

KOLKATA: The West Bengal government finds itself in an unenviable situation. On the one hand, it cannot subsidise power for agricultural and domestic consumers due to its financial crunch. On the other hand, with panchayat polls next year, withdrawing power subsidy for farmers may have severe political consequences for the ruling parties.
A senior official estimated that the financial burden would amount to Rs 500 crore annually if subsidies were kept at the present level, once cross-subsidy was withdrawn."In an extreme situation, there might be some thought on select schemes like Kutir Jyoti (a rural electrification scheme)," he said.
According to an interim order passed by WBERC on November 11, the average cost of production for CESC has been fixed at Rs 3.90 per unit. The tariff would be based on the cost of generation. "We have informed the state government about the order, and asked them to reply within 15 days," WBERC secretary R. N. Das said on Thursday.
WBERC wants to obey to the letter the recent Supreme Court order on the CESC tariff issue that cross-subsidy would have to be abolished. Abolition has also been mentioned in the WBERC Act of 1998, which is the basis of the fixation of tariff for the utilities.
The court order states: "The object of the Act is to prevent discrimination in fixation of tariff by imposing cross-subsidy." If subsidy is to be provided, the state government should do so, it stated.
Average tariff for the domestic sector in low tension connections in CESC areas is Rs 2.70 per unit and for irrigation the tariff is Rs 1.83. On the other hand, high tension industrial consumers paid an average tariff of Rs 4.05 per unit and commercial consumers Rs 4.25 per unit.
While most of the 3.5 million consumers of WBSEB are domestic, they provided only 16.58 per cent of the total revenue in 2000-01. Commercial and industrial users provided 45.52 per cent. About 10 per cent of the total power distributed goes to the agriculture sector.
State power officials say Section 29 (3) of the WBERC Act provides that WBERC can create different tariff structures depending on nature and purpose of supply, geography, load factor and other issues while moving towards a uniform tariff regime.