Provide free power with borrowed money: Union minister attacks Punjab

New Delhi:

Power Minister RK Singh warned that states such as Punjab that use borrowed money to provide free power could fall into a debt trap and said such populist plans are feasible only if the state has the financial resources.

Like any other commodity, electricity involves the cost of generating electricity, and if a country wants to provide free electricity to a subset of consumers, it also needs to have financial funds to pay for the generation costs. If the power generation company is not paid, no electricity is generated in the first place.

Speaking to PTI, Singh said he has been telling states that electricity is not free. “If any country wants to provide liberal powers to any category of people, they can do so, but you have to pay for it.”

However, countries with already high levels of debt are resorting to such populist measures, forcing them to borrow more money to pay for generating utilities, creating a debt trap.

“You should not let your state fall into a debt trap. Many states are close to debt trap because of freebies,” the minister said.

Asked about the names of states that have done so, the bureaucrat-turned-politician said: “Punjab, for example.”

Since coming to power in Punjab in 2022, the Aam Aadmi Party (AAP) government has taken several populist measures, including providing free electricity to up to 300 units per household.

In the first two years of the AAP government, Punjab borrowed as much as Rs 47,000 crore, adding to the state’s already high debt. This has strained finances, with a large portion of the tax revenue earned being used to pay interest and principal on previously borrowed money.

“Many of these states are close to a debt trap,” Singh said.

He further explained that states are borrowing money to provide freebies so that they can remain in power and the burden is being shifted to future generations.

He added that for future generations, there would be no money to build roads, hospitals and schools because whatever the income, it would be used to repay loans. Asked to give an example, he said: “Punjab, for example. Many of these states are close to debt traps”.

Regarding power theft, he said, “AT&C (technical and commercial losses combined) losses used to be 27 percent. Today they are 15 percent, and no one thought that was possible. I did it by combining various measures.” Incentives, legal penalties, everything.”

He also said he hopes to further reduce it (AT&T’s losses) to around 10-12%.

Singh also said that arrears of Rs 20-30,000 in dues from many states have been reduced.

“Therefore, I paid monthly installments (for repayment of overdue amounts) as per the rules itself. Therefore, the current dues have been updated and the arrears have been reduced from Rs 145 crore to Rs 40,000 crore,” he said. When asked about providing consumers with the option of multiple service providers, the minister promised to finalize the required amendments to the Electricity Act, 2003.

The Minister introduced the Electricity (Amendment) Bill, 2022 for this purpose in the Lok Sabha on August 8, 2022 and it was sent to the Standing Committee for consideration on the same day. The committee has yet to provide a report on the bill. But since the bill has been introduced in the Lok Sabha, the new government will have to introduce it again. “I will raise it again. So, what will happen (after the bill is passed)? There will be competition and there will be better services. The regulator will fix the maximum price. If someone (operator) asks for Rs 4 per unit, Also 3.5 pcs per unit, you will prefer (Rs. 3.5).

“So, we filed the amendment. It was tabled in committee. It’s there. I’m going to have to table it again,” Singh said. On the ambitious renewable energy target of 500 GW by 2030, he said India will achieve this target and has locked in around 360 GW of renewable energy, including 190 GW of operational capacity. “…I have about 190 gigawatts of installed renewable capacity, I have 103 gigawatts under construction, which brings it to 290 gigawatts. I have 72 gigawatts under tender. So, I’ve got about 360 GW. I will reach it before time when I achieve all the targets,” the minister said.

Replying to a question about the top priority of the BJP-led government after winning the election and taking over as power minister again, Singh said the top priority now is to increase capacity as soon as possible.

“I expect my demand to double by 2030. Imagine that for a country like ours, demand increases from 243 gigawatts to I think demand by 2032 will be closer to 400 gigawatts. I think it will be slightly more Some,” he added.

On plans to add 80 GW of coal-fired thermal power capacity, he said, “I will not compromise on power supply. Now I have a lot of solar power, but at night there is no solar power. So, at night, you need power. In the morning and There is no wind at night…sometimes”.

He also said that in order to phase out coal-fired thermal power capacity, viable storage is needed because round-the-clock renewable energy requires it.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)