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India Inc pays highest power tariffs
By agencies
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Tuesday, 07 June 2005, 19:30 IST
NEW DELHI: Even as the Indian manufacturing sector is struggling to benchmark its cost competitiveness to the best in the world, it shells out among the highest retail electricity tariffs in the world.
In fact, industry here pays much higher for the power it consumes in comparison with even developed nations such as the U.S., Germany and the UK, with just their Japanese counterparts paying more, according to latest energy statistics from the International Energy Agency (IEA).
On the other side, Indian households are the most pampered electricity consumers in the world, paying the lowest tariffs for the power they consume, as per the statistics available for 30 countries.
The extent to which cross-subsidies are rooted in the domestic tariff structure is evident from the fact that while Indian domestic tariffs are less than half of what is paid by industry, not even one of the other 29 countries included in the survey charge industry more than domestic consumers.
With the Center bending backwards to accommodate pressure from the Left parties to do away with the provision in the Electricity Act 2003 mandating State Electricity Regulatory Commissions to phase out cross subsidies, the skewed tariff structure in the domestic power sector is likely to continue in the foreseeable future.
"While the efficiency of Indian industry is being put to test in areas such as textile and pharmaceuticals, Indian industry pay the highest in terms of power costs. In fact, the overall tariffs paid by industry could be even higher since much of industry uses captive sources of generation to tide over inadequacies in power supply by the State Electricity Boards," a power sector analyst said.
According to the IEA's `Key World Energy Statistics', Indian domestic sector, on an average across all States, pays just three cents for every unit of power used. As against this, domestic consumers in South Korea and Mexico pay 7 cents per unit, in the U.S. and Sweden domestic consumers pay eight cents while Spanish domestic consumers pay 12 cents and the highest domestic tariffs of 23 cents per unit of power is shelled out by Japanese domestic consumers.
On the other hand, Indian industry pays 7 cents per unit of power consumed, an amount exceeded only by Japanese industry. Industrial consumers in developed countries such as the U.S., the UK, Spain, New Zealand, Germany and Canada pay much less than their Indian counterparts.