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Between Centre’s push for prepaid power meters & farmer fears, Punjab’s AAP govt in tight spot

Union govt asks Punjab for roadmap to replace old meters within 3 months, or lose power reform funds. AAP govt is facing big debt burden, promised 300 units of free power in polls.

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New Delhi: Within weeks of forming a government in Punjab, the Aam Aadmi Party (AAP) administration is in a tight spot, after the Union government sought a roadmap from the state to replace existing electricity meters with prepaid digital ones within three months, or else risk losing power reform funds.

The Punjab government is facing resistance from farmers’ unions, which have threatened to launch a state-wide agitation if the government decides to install prepaid digital meters. 

There are fears that installing such meters could result in farmers — who are currently under a full-subsidy net — being forced to shell out money from their own pockets for power consumption. On its part, the AAP government in Punjab is working towards launching a scheme to provide 300 units of free electricity per month to all households. This was one of the party’s main poll promises in the state. It’s estimated that this will put an additional financial burden of around Rs 5,000 crore per year on the state exchequer.

But, with a debt burden of Rs 2.82 lakh crore, Punjab faces a severe shortage of funds. And to make things work, several state officials said, reforms are necessary. The power sector is seen as one with room for reforms.

“We will hold a meeting with various stakeholders on the prepaid meters issue, especially the ones protesting against it, and assess all the pros and cons of the initiative,” Punjab power minister Harbhajan Singh told reporters Tuesday.

“Electricity comes under the concurrent list. So, both the Centre and the states can make decisions in this domain. The Punjab government has not yet taken a decision on the matter. We assure you we will take a decision only in the larger public interest,” he said.

The concurrent list, in the seventh schedule of the Constitution of India, is a list of domains over which both central and state governments have jurisdiction. 

Singh further said, “We will soon fulfil all our guarantees on the issue of electricity. Please give us some time. On the 300 units free electricity scheme, a decision will be made very soon.”

On 10 March — the day when AAP’s massive victory in the Punjab assembly polls was announced — the Union government had sent a letter directing the state to submit a roadmap on upgrading all meters to prepaid ones within three months, said a senior official in the state secretariat.

Punjab’s new chief minister, Bhagwant Mann, took charge on 16 March. Since then, the official said, the state government has received at least one reminder on the matter, ThePrint has learnt.


Also read: Why BJP & AAP are locking horns again, this time over change in Chandigarh admin service rules


Financial burden

For the financial year 2021-22, the state’s total power subsidy bill was Rs 10,668 crore, according to government records. Of this, Rs 7,180 crore went towards the subsidy to farmers, who do not have to pay power bills.

When AAP came to power in Punjab on 10 March, it faced total dues of Rs 12,600 crore towards the cash-strapped Punjab State Power Corporation Limited (PSPCL), including around Rs 9,000 crore in pending power subsidy payments.

This is largely due to previous governments’ continuous non-payment of dues to cover the cost of subsidies, said the senior government official quoted above.

The officer further said when the Congress government took over the state from the Shiromani Akali Dal-Bharatiya Janata Party regime in 2017, the debt towards the power corporation stood at Rs 2,342 crore. In 2021-22, the last financial year under the Congress’ regime, the debt was Rs 20,016 crore, of which Rs 7,080 crore was paid till 31 December and Rs 2,315 crore adjusted in lieu of some other duties. The AAP inherited the balance as well as subsidies due for the last quarter of 2021-22.

Reportedly, Punjab also loses around Rs 1,200 crore every year to electricity theft.

In conversations with ThePrint over the past two weeks, several senior officials in the state government said that Punjab desperately needs reforms in the power sector.

Reform ‘can help immensely’

The Union government launched the Revamped Distribution Sector Scheme on 20 July, 2021. This scheme envisages installing 25 crore pre-paid meters to cover all domestic consumers across the country by March 2025.

Under this scheme, according to the senior official in the Punjab government quoted above, the state must pay 85 per cent of the cost, while the Centre bears 15 per cent. 

However, while the state bears the initial cost of changing the meters, they will be able to charge consumers in monthly bills spread over a period of five years.

A senior official in the Union government’s power ministry confirmed that it has sought a roadmap from Punjab on replacing old meters with prepaid digital ones.

“The same letter was sent to other states too. For a state like Punjab, such a reform can help them immensely in reducing transmission and distribution losses, pilferages and detecting thefts,” said the official.

The official further said, “In the roadmap, states must inform the central government about when they plan to start the pre-paid meter project, how they divide the programme into phases, and year-wise deadlines.”

“Only after that will the file go to a monitoring committee, which will take a call on how much funding can be given to the state for taking up reforms in the power sector in the form of installing prepaid meters.”

To be sure, the officer clarified, this fund is separate from the Centre permitting states greater latitude to borrow – to the tune of an additional 1.5 per cent of the gross state domestic product – in exchange for adopting certain reforms pushed by the Union government.

These include reforms such as ‘One nation, one ration card’, policies concerning ease of doing business, and reforms in the areas of local bodies and power.

Why Punjab relies on old meters

According to Punjab government records, the state has around 1 crore electricity consumers.

None of these consumers has a prepaid meter yet. While around 90,000 do have postpaid digital meters, installed under a drive launched by the previous Congress government in January 2021, the rest still rely on traditional analogue ones, the Punjab government officer said.

Previous governments also tried to bring in reforms, but there was always resistance, added the official.

He further said, “Farmers fear that upgrading meters could be an attempt by the government to bring them fully or partially outside the subsidy net. Secondly, paying for the meter even in instalments would mean increased input cost for farming. Digital meters cost around Rs 500-1,500. Prepaid ones would cost around Rs 6,000. If they were against simple digital meters, they are definitely going to resist prepaid ones.”

(Edited by Rohan Manoj)


Also read: Hacker says ‘flaw’ in Punjab govt power site left consumer data exposed. Firm says snag ‘fixed’


 

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