The Hindu Business Line : At Rs 4.50 per unit, power tariff cuts India Inc’s competitiveness

Industrial consumers in India, across various slabs in different States, pay an average of Rs 4.50 per unit, with the industrial tariff slabs as high as Rs 8.04 per unit, as per Government data for last year.

Industrial consumers, in comparison, paid out tariffs of Rs 2.25 per unit in the US, Rs 1.98 per unit in France, Rs 2.10 in Chinese Taipei, Rs 4.11 in the UK, according to data sourced from the International Energy Agency for 2006. In Japan, however, industrial tariffs are comparably higher at Rs 5.21 per unit.

Poor Quality

Domestic tariffs in India, which ranged between Rs 1.14 and Rs 5.16 per unit for households across various States, are comparable to tariffs in most of these countries. India, however, stands out as an exception with industrial electricity tariffs much higher than domestic rates.

Along with high power cost, which has a direct bearing on operational efficiency and cost-competitiveness of industry, the poor quality of supply is an added problem in the Indian context.

An earlier Emerson Network Power study had indicated that India Inc could be losing over Rs 22,000 crore in direct losses due to poor power quality and operating environment related downtime—estimated to be around 2.2 per cent of the gross output of the total industrial and service sectors.

Though India’s power generation cost is, on an average, comparable to those in several developed countries, industrial tariffs are comparatively much higher on account of cross-subsidisation of agriculture and domestic sectors and high aggregate technical and commercial losses.

Besides, electricity duty, which varies widely from State to State, also creates additional burden for the industrial consumers.

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