Free electricity for irrigation pumpsets of farmers being offered by governments through various schemes appears to have proved costly for the State-owned Gulbarga Electricity Supply Company (GESCOM). With government subsidy dues growing, GESCOM is forced to borrow from various financial institutions to manage its operations and ultimately, transfer the burden onto consumers by increasing power tariff.
The State Government began offering free electricity for pumpsets in 2007-08 and subsidy dues payable to GESCOM continued to pile up every year as the government made partial payment for the power consumed by the beneficiaries. By December last year, the principal irrigation pumpset subsidy dues stood at ₹1,470.34 crore and interest calculated at 12% per annum and charged on dues every year grew to ₹1,733.43 crore, thus taking gross dues to ₹3,203.77 crore.
It is similar in the case of Ganga Kalyan Scheme. Different State-owned corporations that got the scheme implemented for their targeted beneficiaries never cleared dues payable to GESCOM in the last 20 years. Partial payment has thus resulted in the accumulation of ₹502.25 crore dues by December last year. Interest calculated at 12% per annum and charged on arrears every year grew to ₹297.74 crore, taking gross dues under the scheme to ₹799.99 crore. The total government dues payable to GESCOM has thus crossed ₹4,000 crore, which includes the arrears of irrigation pumpset subsidy and Ganga Kalyan scheme as well as interest levied on arrears.
Karnataka Electricity Regulatory Commission (KERC) had, in its regulation in 2008, said that the government should realise the subsidy in advance. The government has not cleared dues, leave alone make advance payment, pushing GESCOM into a debt crisis, as it raised ₹1,700 crore loan from various sources.
The question of levying interest on government dues has been raised in almost every stakeholders meeting that KERC conducts before passing orders on tariff revision. As there is no provision in the Electricity Act 2003 for any concession for government dues and any exception for interest levied on dues, KERC had, in its Tariff Order 2021, held that the “non-release of subsidy results in borrowing from other sources by paying necessary interest to pay liabilities which cannot be passed on to consumers” and directed GESCOM to take up the matter with the government.
It had also directed GESCOM to place the subject before the Board of Directors and pursue it with the government. However, GESCOM has not complied with the KERC direction.
Meanwhile, GESCOM, instead of taking up the matter with the government and getting dues cleared, has approached KERC seeking permission for power tariff revision.
Deepak Gala, a Kalaburagi-based environment activist, has filed an objection and appealed to the KERC not to allow GESCOM to hike power tariffs.
“If ordinary power consumers don’t pay electricity bills for a month, GESCOM will charge interest on dues. This is applicable to the government also as there is no concession or exemption for government dues in the Electricity Act 2003. The deficit of revenues caused by GESCOM’s misdeeds and the government’s apathy cannot be transferred to consumers by the way of tariff hike... The government is killing its own baby. Non-payment of dues to GESCOM is a larger design to destabilise public sector units and subsequently, sell them to private players at throwaway prices,” Mr. Gala told The Hindu.
