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JAN 21 2016

B'luru's industry body slams moves to increase power tariffs in Karnataka

  • Economic Times, ET Bureau / Hyderabad
  • Created: Thu 21st JAN 2016

Slamming a proposal to raise power tariffs in Karnataka, the Bangalore Chamber of Industry and Commerce (BCIC) has urged the state government to keep its tariffs competitive to retain its competitiveness from the investor point of view.

The five electricity supply companies (Escoms) in Karnataka, including Bescom which supplies electricity to Bengaluru, have asked for an average increase of Re 1.02 per unit evoking sharp criticism from industries. The BCIC also wondered how Bescom's request for increase in fixed costs will help its case. The BCIC has said Bescom needs to keep its fixed costs under control. "BCIC is not clear how the energy charge will reduce by restructuring of tariff when Bescom has asked for increase of Rs.1.02/ Unit increase in energy charge," the industry body wondered.

"Compared to the previous tariff revisions, Escoms have sought the highest margin during 2015-16. While the Escoms all these years sought hikes ranging from 66 paise to 88 paise, this year they have sought a whopping hike of Rs 1.02 per unit of power which the Chamber feels will have a cascading effect on the general prices," the industry chamber said.

Chamber's president Anuj Sharma: "The industry is already facing severe hardships due to unscheduled power cuts, poor frequency, and staggered holidays of industry across the State and is struggling to manage its production and growth. The proposed hike of more than one rupee per unit will only further aggravate the situation and further erode margins of the industry."

The proposed hike, according to him, will result in increase in prices leading to higher inflation. "If this proposal is accepted, then Karnataka will have highest energy charges/base rate among the southern states and that will be certainly detrimental to industrial development in the State," he said.

BCIC senior vice president Thyagu Valliappa wondered why the Aggregate Technical & Commercial (AT&C) at these Escoms remained high. "It was expected that on account of better availability of power in the coming months, fall in commodity prices (coal), there will be no tariff increase in the coming financial year," he said.

The Chamber insisted that the ESCOMs must target to reduce the AT&C losses to less than 10 percent, focus on on-time commissioning of on-going power projects and must also ensure to meet the future demand as well as reduction of short term power purchase agreements at high cost. Replacement of high power consuming pump sets for agricultural use with high efficiency pumps must be taken up expeditiously.


Karnataka Banglore Electricity Supply Company Ltd Coal Tariff Energy Bangalore Inflation Power Electricity

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