Jan Sangarsh Morcha Press Release
  04 December 2002
Save The Narmada, Save Humanity!

Unprecedented 800% tariff hike ordered by Madhya Pradesh Regulatory Commission designed to destroy MP economy; Strong struggle will be launched to combat tariff hike and power sector reforms at the instance of foreign powers and the ADB

NARMADA BACHAO ANDOLAN
Jail Road, Mandleshwar
District Khargone, Madhya Pradesh
Tel: 07283-33162
Email: nobigdam@sancharnet.in
SHRAMIK ADIVASI SANGATHAN
Near Bohra Masjid, Betul, MP
Tel: 07141-33971

The Madhya Pradesh Regulatory Commission created a dark history in the entire history on the 30th of November 2002, when it gave an unprecedented order for 800% increase in the tariffs of the agriculture sector and 30% for the domestic consumers. The tariff increase allowed by the Commission are in excess even of the tariff increases asked for by the Madhya Pradesh State Electricity Board. Simultaneously, because the Regulatory Commission has permitted the Variable cost formula, tariffs may be hiked to any extent after only six months from now. This tariff hike being brought in at the instance of the Asian Development Bank, the British and the Canadian government and their development agencies will serve their cause of wreaking huge destruction of the Madhya Pradesh economy and pauperizing large sections of the farmers and the common people of Madhya Pradesh. While on one hand there will be darkness in the homes common people , on the other hand thousands of farmers facing the 800% tariff hike will be compelled to commit suicide in the manner of late Chindwaada farmer Kishan Okte.

The Jan Sangharsh Morcha condemns this deliberate attempt by the Digvijay Singh government to destroy our own state and people, because of agreements executed with foreign financial institutions and demands that the Madhya Pradesh government must immediately file a review petition to withdraw the tariff hike, as well as decrease last year's tariff increase, or declare a subsidy that will nullify the impact of this tariff increase. It announces that the Jan Sangharsh Morcha and other people's organizations and trade unions will launch a struggle all over the state against this hike and the anti-people power sector reforms. The Jan Sangharsh Morcha also calls on the people of this state to comprehend how a clutch of multinationals have sought to impose the Reforms Act 2001 and the Regulatory Commission on the people to fulfill their own profit-seeking agenda, and to struggle for the repeal of this anti–people Act and the dismantling of the Regulatory Commission.

MPSERC new tariff order for hike unprecedented

An analysis of the new tariff order declared on the 30th of November 2002 by the MPSERC demonstrates that while the metered consumption charges in agriculture has been increased to 200%, or twice the original tariffs, as far as the consumers paying on flat rate basis in agriculture is concerned, who constitute 86% of all farmers in the state, the tariff increase given by the MPSERC is 800 %. The increase in the flat rates is 233 %, but simultaneously, the tariff order decreases the time period for which this payment will apply to 6 hours a day. For use for more than 6 hours going upto 12 hours , the tariff will be 1.5 times the rate for 6 hours. Thus compared to the present rates, the increase will be of the order of 400%. Since the present rates are for 24 hours supply, (even if that has not happened in the last one year) for 24 hours supply, the tariff increase will become 800%.

This becomes clear from the following table : Table 1

MPSERC direction for state government subsidy not legally binding, can be reversed at any time : As per the Urja Sudhar Adhiniyam 2001, the MPSERC has no legal powers to direct the Madhya Pradesh government to provide subsidies for any class of consumers. In fact last year's Tariff order gave no directions about state subsidies. It is up to the state government to take decisions about what subsidies it desires to give. Thus the suggestion of the MPSERC to the state government to provide subsidy upto 50% for the agricultural sector has no legal basis. Even if the state government agrees to give this subsidy and reverses it after three months, it can easily do so.

However even if the state government does provide subsidy to the agricultural sector upto 50% of the increase in tariffs, the increase in tariffs that the farmers will have to face will be 300 %, - an inhuman and unacceptable increase. The following table (Table 2) clarifies the situation.

Tariff hike for domestic consumers both unbearable and unnecessary :

The MPSERC has ordered a 30% increase in the tariffs to be paid by the domestic consumers. MPSEB's second tariff petition clearly states that the domestic consumer is already paying 41% of the cost of supply of electricity. If the MPSEB had decreased the T&D losses from 51 % to 42 % as ordered by the MPSEFC in its First tariff order, and if the Plant Load Factor had been brought up to 71 % as directed by the MPSERC , even at the present tariffs the domestic consumer would be paying 64 % of the cost of supply. As per the Urja Sudhar Adhiniyam 2001, the domestic consumer is to pay up to 75 % of the cost of supply by 2006. This is only the second year of the power sector reforms, therefore there was absolutely no need to increase the tariffs of the domestic consumers this year. The impact is clear. Several lakh consumers left the grid last year. With these tariffs, a further several lakh consumers will have to leave the grid altogether because they will not be able to pay the bills.

Power in Madhya Pradesh among the highest in the country :

The tariffs declared by the MPSERC has now made the electricity tariffs in Madhya Pradesh among the highest in the country. It may be noted that while the per capita income in Madhya Pradesh is among the lowest in the country, the electricity tariffs in the state both for the domestic and agricultural sectors are the highest in the country. Inn fact, even as per the Urja Sudhar Adhiniyam 2001, the electricity tariffs were to be linked to the paying capacity of the consumers. However the MPSEB or the MPSERC have done NO paying capacity studies AT ALL and the MPSERC has simply increased the tariffs by a huge manner in an ad hoc and destructive manner, on the instructions of the Asian Development Bank.

Table showing tariffs India wide

Permission to Variable Cost adjustment formula will allow further tariff increase after six months

The MPSERC has a very dangerous decision also agreed to permit Variable cost adjustment after six months. They have state that the MPSEB be allowed to adjust and put onto the consumers water taxes, auxiliary electricity consumption, fuel costs and all other such costs that cannot be estimated a priori. This will open the doors for further and unrestrained increase in electricity tariffs within six months from now.

MPSERC Non–compliance of MPSEB, promotes inefficiency and punishes consumers

It may be noted that the MPSEB did not comply with the directions of the MPSERC given in its First Tariff Petition regarding production efficiency norms, decrease in Transmission and Distribution losses and increased collection of outstandings causing a loss of Rs. 2500 crores of revenue.

Had they followed the directions, this tariff increase would not have been required at all. But the MPSERC instead of punishing and pulling up the MPSEB and insisting on compliance, chose to put the full burden on the consumers. It is a matter of amazement that the T&D losses that had to be reduced to 37% as per the first Tariff order have now been allowed to go upto 43.77 %, promoting inefficiency on part of the MPSEB .

Current tariff hike at the behest of the Asian Development Bank : Designed to kill

It is clear that the MPSEB did not comply with the orders of the MPSERC about performance and collection parameters last year and that this flagrant non-compliance was adequate and sufficient basis for the MPSERC to reject the MPSEB's tariff petition. Yet, the MPSERC did not choose to do so and made the recent anti-people destructive order as per the conditions of the agreement of the Government of Madhya Pradesh with the Asian Development Bank. The agreement makes it eminently clear that the tariff have to be hiked before every instalment of the loan is disbursed. The hold of the ADB over decisions can be seen from the fact that the ADB team that is assessing the progress of the reforms is present in Madhya Pradesh on the very day that the Tariff order was declared. It is also well known that Shri P.K.Mehrotra, the present Chairman of the MPSERC was the Chief Secretary in November 2001, and it was under his signature that the loan agreement with the ADB was finalized. Thus, the people of Madhya Pradesh have to now look to the very person who undertook on the behalf of the state to implement the tariff increases as per ADB requirements and to insulate these decisions from the general public, to deal out justice to them. Itt also makes it very clear indeed why justice is not and cannot be forthcoming.

Current tariff increase will destroy the state

There is not even a shred of doubt that this tariff hike ordered by the MPSERC will destroy the economy and in fact is designed to do so. In the absence of any paying capacity studies by the MPSEB and the MPSERC that could form the basis of any rational tariff decision as well as the clear written and oral objections of the numerous people who appeared before the MPSERC against any further hike, for the MPSERC to give such an order is to deliberately bring destruction to this state at the behest of the Asian Development Bank.

It may be noted that after last year's tariff hike, lakhs of consumers, a large percentage of those Adivasis had to have their electricity connections severed since they were unable to pay their bills. It is clear that this tariff increase in the fourth year of drought is a blatant attack on the very survival of the tribal areas.

This tariff hike will compel thousands of adivasis and farmers to commit suicide as is already happening in Karnataka, Punjab, Andhra Pradesh and Kerala. On the other hand, lakhs of adivasis whose livelihoods will be ruptured because of lack of electricity will have to succumb to starvation deaths. Millions of others will face darkness in their homes.

Tariff hike and power sector reforms must be withdrawn: Entire state to be mobilized for a long struggle ahead : The common forum of the people's organizations of Madhya Pradesh – the Jan Sangharsh Morcha condemns this murderous assault on the people of Madhya Pradesh in the name of power sector reforms, to be wrought through the present electricity tariff hike, at the instance of foreign governments and multinational corporations. The Jan Sangharsh Morcha demands that the Madhya Pradesh government must immediately file a review petition to withdraw the tariff hike, as well as decrease last year's tariff increase, or declare a subsidy that will nullify the impact of this tariff increase. It announces that the Jan Sangharsh Morcha and other people's organizations and trade unions will launch a struggle all over the state against this hike and the anti-people power sector reforms. The Jan Sangharsh Morcha also calls on the people of this state to comprehend how a clutch of multinationals have sought to impose the Reforms Act 2001 and the Regulatory Commission on the people to fulfill their own profit-seeking agenda, and to struggle for the repeal of this anti–people Act and the dismantling of the Regulatory Commission.

The new phase of the struggle will begin with a huge rally in Mandleshwar in December 2002.

Alok Agarwa, Convenor, Jan Sangharsh Morcha
Chittaroopa Palit, Narmada Bachao Andolan