Panel examines direct benefit transfer of subsidy for power consumers

NEW DELHI: After cooking gas, consumers may now get direct subsidy on electricity. An expert panel comprising senior officials from states and industry is studying the matter and will present its report to the power ministry next month.

The expert committee, set up by the ministry to suggest ways to increase electricity demand and consumption, is examining subsidising the target consumers in a manner similar to what has been done in the case of LPG cylinders for plugging leakages and bringing down the subsidy burden.

The Niti Aayog and industry experts have been advocating the scheme to lower subsidy, prevent its misuse and strengthening power distribution utilities.

The committee comprises principal energy secretaries of states like Madhya Pradesh, Gujarat, Uttar Pradesh and energy secretaries of Tamil Nadu and Bihar, besides top officials of the Central Electricity Regulatory Commission and the Central Electricity Authority.

Under the direct benefit transfer scheme for cooking fuel, LPG cylinders are sold at market rates after which bank accounts of the consumers eligible for subsidy are credited with the amount of subsidy.

"Currently, subsidy is calculated as the difference between energy sold and amount collected.

If the direct benefit transfer scheme is implemented, only the actual consumption, and not power pilferage and losses, will be subsidised," a senior official part of the committee told ET on the condition of anonymity.

The committee is in the process of finalising its recommendations which will be sent to the power ministry for action, he said.

State governments give subsidies to power distribution utilities for selling electricity to consumers at less than the procurement cost or for free in some cases. However, subsidy payments by states are not made regularly, adding to the financial woes of distribution utilities.

"In fair business practice, state electricity regulators declare subsidy amount at the beginning of every financial year and the state governments are obligated to make quarterly payments to electricity distribution companies. But when the subsidy payment is delayed, financial conditions of discoms deteriorate," the official said.