New Delhi: The Aam Aadmi Party (AAP) government in Punjab is not going to submit the roadmap the Union government asked it for — about plans to replace existing electricity meters in the state with prepaid ones — even if it means foregoing power reform funds, ThePrint has learnt.
On 10 March, the day when the AAP came to power in Punjab, the Centre had sent a letter seeking 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 feels that the financial commitment of a prepaid meter programme — being pushed by the Centre as a power reform measure to check pilferage, power theft, transmission losses, etc. — will interfere with its plan to provide 300 units of free electricity to every household, which it wants to roll out very soon, according to senior officials in the administration.
They further said the government is ready to go for a programme to replace existing analogue meters in the state with digital postpaid ones, which are also called ‘smart’ meters. This, they added, will adequately serve the purpose of power sector reforms for now, with lesser financial burden.
“The state government is of the opinion that there is no need to have prepaid meters. The government will later replace existing (analogue) meters with smart (digital postpaid) meters, and that will adequately serve the purpose in terms of plugging gaps in the system,” a close aide of Punjab Power Minister Harbhajan Singh told ThePrint Thursday, on the condition of anonymity.
Another senior official in the state power department said the government held meetings with several stakeholders earlier this week, following which the decision to not go for a prepaid meter programme was taken.
“Prepaid meters are also a big financial commitment. Our priority is to provide 300 units of free electricity every month to every household. That scheme has to be rolled out at the earliest,” the official added.
Also Read: Hacker says ‘flaw’ in Punjab govt power site left consumer data exposed. Firm says snag ‘fixed’
Impact of losing reform funds
With its decision to not submit the roadmap, the AAP government risks losing the reform funds promised by the Centre. However, there is a catch here. Officials in both the central and Punjab governments told ThePrint that the reform funds associated with the prepaid meters programme are not fixed, and will be decided on a case-to-case basis for states by a monitoring committee set up by the Union power ministry.
Hence, there is no certainty about exactly how much Punjab, which is already reeling under massive debt, will receive if it were to accede to the Centre’s demand.
Electricity comes under the concurrent list in the seventh schedule of the Constitution, which brings it into both Centre and state jurisdiction.
ThePrint sought a comment on the matter from the Union power ministry spokesperson through calls and messages, but did not receive a response. This report will be updated when one is received.
Poll promise, debts & need for reforms
Providing 300 units of free electricity every month to every household was one of AAP’s main poll promises in the run-up to the state assembly elections, which it won with a thumping majority. It is estimated that this will put an additional financial burden of around Rs 5,000 crore per year on the state exchequer.
Punjab is already reeling under an overall debt burden of Rs 2.82 lakh crore. As on 31 March 2022, it also owes around Rs 10,000 crore worth of subsidy dues to the cash-strapped Punjab State Power Corporation Limited (PSCPL), another senior government official told ThePrint.
The official further said that the power sector is seen as a domain that has immense room for reforms that can help mobilise more funds, especially when Punjab also bears financial losses to the tune of around Rs 1,200 crore per year due to electricity theft.
The Union government has been pushing for a prepaid meter scheme across states since July 2021 — when it launched the ‘Revamped Distribution Sector Scheme’, which aims to convert all 25 crore electricity meters across the country into prepaid ones by 2025.
“Punjab is one of the states that heavily rely on outdated analogue meters and replacing them with prepaid ones can help them immensely, especially in reducing pilferages, transmission and distribution losses, electricity thefts, etc.,” said a senior officer in the Union power department.
According to state government records, there are around 1 crore electricity meters installed across Punjab, of which only 85,000 are digital postpaid ones, while the remaining are analogue meters that have become obsolete in several states by now. The state has no digital prepaid meters as of now.
Why Punjab is in a tough spot
Punjab faces two major roadblocks when it comes to prepaid meters, the power official quoted earlier said — resistance from farmer unions, and difficulties in financial commitment.
Farmer unions have threatened to launch a state-wide agitation if the government decides to install prepaid digital meters. There are fears that such meters could result in farmers — who are currently under a full-subsidy net — being forced to shell out money for power consumption.
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.
As far as the finances are concerned, under the Centre’s initiative concerning prepaid meters, the state must pay 85 per cent of the initial cost while the Centre will bear the remaining 15 per cent.
Even though the state is allowed to recover the amount in equal monthly installments attached to power bills over five years, the initial commitment would cost the state at least Rs 5,100 crore, said the senior official quoted above, adding that this would make it impossible for the state to roll out the 300 units free electricity scheme anytime soon.
A state power official said that replacing existing analogue meters with digital postpaid meters in Punjab is estimated to cost the government not more than Rs 1,000 crore. “In terms of power sector reform, it is financially doable, especially if done in a phased way spread over 1-2 years. And it will significantly help in reducing thefts, pilferages, etc.,” he added.
(Edited by Gitanjali Das)
Also Read: Debt-ridden economy, angry youth seeking well-paying jobs — AAP faces tough trek in Punjab