Maharashtra cuts power tariff by 20 percent ahead of election

MUMBAI Mon Jan 20, 2014 6:38pm IST

A worker installs an electric power cable on a pylon at a newly constructed power station in Jammu February 5, 2011. REUTERS/Mukesh Gupta/Files

A worker installs an electric power cable on a pylon at a newly constructed power station in Jammu February 5, 2011.

Credit: Reuters/Mukesh Gupta/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - Maharashtra said on Monday it will cut electricity tariffs by a fifth with immediate effect, as the Congress party-headed state government woos voters ahead of national elections later this year.

The tariff cut follows a similar move by the newly elected Delhi state government in January, and sparked demands by lawmakers in other states for similar reductions.

Many Indians see cheap or free power as a right, not a privilege. But by keeping tariffs low, politicians have strained the finances of local distribution companies, who often resort to crippling power cuts. In turn, such blackouts hobble the competitiveness of Asia's third-largest economy.

The tariff cut in Maharashtra, applicable to customers of the state electricity distribution company Mahavitaran, which supplies power to the entire state except Mumbai, will cost a total of 7.06 billion rupees every month.

Of this, Mahavitaran will bear a loss of 1 billion rupees, while the balance will be paid by the government as subsidy, an official in the chief minister's office told Reuters.

The government will also decide in eight to ten days on how to extend the benefit to customers in Mumbai, India's financial capital. Electricity in Mumbai is distributed by private sector companies Reliance Infrastructure (RLIN.NS), Tata Power (TTPW.NS) and state-controlled BEST.

The Delhi state government, run by the newly-founded Aam Aadmi (Common Man) Party, in January began to subsidise power tariffs for lower usage residential customers.

Prime Minister Singh's government has attempted to fix the financial health of distribution companies with a $32 billion bailout package that it rolled out last year, that came with strict riders.

(Reporting by Prashant Mehra; Editing by Anand Basu and Matthias Williams)

FILED UNDER:
  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Tobacco Control

Tobacco Control

India moves toward ban on loose cigarettes to deter smoking   Full Article 

Modi at SAARC

Modi at SAARC

Modi gives Buddha a miss as SAARC leaders flock to Nepal.  Full Article 

Reuters Insight

Reuters Insight

In Modi’s India, green shoots of reform from Rajasthan.  Full Article 

Investing in ETFs

Investing in ETFs

U.S. investors elevate India over other emerging markets  Full Article 

J&K Elections

J&K Elections

Kashmiris turn out to vote as BJP bids for power  Full Article 

Trade Talks

Trade Talks

India, U.S. hold first trade dialogue in four years  Full Article 

Modi's Wife

Modi's Wife

Modi's estranged wife unhappy over round-the-clock security  Full Article 

Global Economy

Global Economy

OECD sees gradual world recovery, urges ECB to do more  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage