War within Andhra Congress over power tariff hike
The four state-owned power distribution companies (Discoms) have proposed a 10-30 percent tariff hike.
Hyderabad: With a section of ministers mounting pressure on Andhra Pradesh Chief Minister N Kiran Kumar Reddy to withdraw the proposed steep hike in electricity tariff, the ruling Congress in the state is feeling the heat over the issue from both within and outside the party. The four state-owned power distribution companies (Discoms) have proposed a 10-30 percent tariff hike for various categories of consumers from April to raise Rs 12,723 crore to bridge the massive deficit projected for 2013-14.
The Andhra Pradesh Electricity Regulatory Commission (APERC) will permit the Discoms to hike the tariff after a public hearing. With Discoms mooting the hike with full backing from the Chief Minister, a section of ministers has decided to cross swords with him. Fearing that the move would badly impact the party's prospects in next year's Lok Sabha and state assembly elections, at least three ministers, including state Congress chief Botsa Satyanarayana, have decided to raise the issue during next week's cabinet meeting.
Health Minister D.L. Ravindra Reddy and Endowments Minister C. Ramachandraiah questioned the decision to submit the proposals without discussing the issue either in the cabinet or in the party. "The hike will definitely damage the party's chances in the next elections," said Ravindra Reddy, a known detractor of the chief minister. Ramachandraiah also dashed off a letter to the state Congress chief, expressing unhappiness over the proposed hike. Union Tourism Minister K. Chiranjeevi defended Ramachandraiah's remarks and advised the government to reconsider the move. State party chief Botsa Satyanarayana, who is the transport minister, said the issue would be raised during the next cabinet meeting.
A section of the Congress, including senior leaders and MPs V. Hanumantha Rao and P. Goverdhan Reddy, feel that the steep hike would further burden the people and the party would suffer in the elections. They pointed out that the hike was proposed close on the heels of a Rs.10,000-crore burden imposed on 22.4 million consumers in the name of Fuel Surcharge Adjustment (FSA) during the last few months. They also said the hike would anger the people as the tariff is being increased every year despite the electricity shortage.
The attack within the party forced the chief minister to depute his loyalists on damage control. Finance Minister Anam Ramnarayan Reddy said the government had nothing to do with the proposals submitted by the Discoms. He also said the hike had only been proposed. In an attempt to pacify the opponents within the party, the Chief Minister also dropped hints that the government would share the burden to the extent of Rs 3,000 crore. This would be in addition to Rs 7,000 crore the government is already giving as subsidy every year to provide free electricity to farmers.
The opposition parties are already up in arms over the proposed hike. The main opposition Telugu Desam Party (TDP), the YSR Congress party, the Telangana Rashtra Samithi (TRS) and the left parties have all taken to streets to demand a rollback. The opposition parties have termed the hike unacceptable, saying this, coupled with the FSA, would double power bills. Leader of Opposition and TDP chief N. Chandrababu Naidu pointed out that the Congress government had thrice effected tariff hikes in the last three years of its rule to the extent of Rs 9,000 crore and was once again resorting to a hike of over Rs 12,000 crore.
The industrial sector, which will bear the brunt of the proposed hike, has warned the government that industry in the state would lose its competitive edge. The Confederation of Indian Industry (CII) estimated that the proposed hike would annually add a burden of Rs 607 crore and Rs.4,728 crore on small and large-scale industries. The industry bodies are already worried over the impact of the power cuts on production.
The state has been reeling under an electricity crisis for the last two years due to an increase in demand and a fall in generation, mainly due to lack of rains and natural gas shortages. Experts have warned that the situation may worsen in view of the rabi crop season over next two months and the expected increase in demand in summer. The electricity shortage, which is 65 million units (mu) at present, is likely to go up to 100 mu in the coming days.
The Discoms have to shell out huge money for buying more power from outside the state to meet the demand. The Discoms have projected a deficit of Rs 18,607 crore in 2013-14 even after collecting Rs 30,582 crore from consumers through the current tariff. Even if the proposed tariff is accepted by APERC, they will still have a deficit of Rs 5,884 crore, which they hope to bridge with the subsidy from the government.