Do not burden industry with power subsidy for others- Montek report

CHANDIGARH: Do not burden Punjab industry with power subsidy given to other consumers, Montek Singh Ahluwalia committee final report to develop a post-COVID medium-term and long-term economic strategy for Punjab, and instead suggests rationalising the power subsidy, strengthening the transmission and distribution system of PSPCL, and closure of thermal plants with a lifespan of more than 25 years.

The report suggests that cross-subsidy burden of agriculture and other consumers should not be passed on to the industry or even commercial sector and this policy needs close examination by a group of experts who should be tasked to make recommendations after studying the experience of other states. In its interim report, the committee had suggested that Punjab’s policy of free power for agriculture has led to an unsustainable the burden on the budget and most of the subsidy accrues to larger farmers.

V K Gupta a spokesperson of All India Power Engineers Federation (AIPEF) said that Punjab is the only state in the country where the subsidy has been given to the industry. Most of the subsidy is taken by the large-scale industrial units and big industrial houses.

In another suggestion, the report says that the distribution and transmission system of PSTCL/PSPCL needs to be strengthened. PSPCL has been unable to make investments due to financial constraints. For this Punjab government should either make available the budgetary resources or explore alternate ways. implying privatisation.

The interim report had suggested that there is a case for experimenting with privatisation of distribution in selected cities in Punjab. It would be a good way of attracting major investors into Punjab and the industry will benefit from lower tariffs in the longer term.

The report reiterates its interim report suggestion to close thermal units at Ropar and Lehra Mohabatt which have completed a life span of 25 years.PSPCL should do the advance planning to recover the best market price for equipment and land and to ensure a smooth transition to other sources of renewable power.

The other reforms needed are to reduce aggregate technical and commercial (AT&C) losses, converting the subsidization of agricultural consumption of electricity into direct benefit transfers, and reducing the gap between average cost and average revenues.