New Delhi: Delhi Electricity Regulatory Commission (DERC) has said that tariffs in the national capital will go up by over 24% from July 1, following its approval to the private power distribution companies' (discoms) proposal to raise domestic tariff.
"The increased tariff will be effective from July 1," P D Sudhakar, chairman of DERC said Tuesday, adding there will not be another hike in prices for the next two to three years.
The power regulator also said an additional 8% surcharge will be levied on the overall electricity bill to help recover the past losses of discoms like BSES Rajdhani Power Ltd, BSES Yamuna Power Ltd and Tata Power Delhi Distribution Ltd.
"With the tariff increase I think the current bleed that the discoms were facing of almost Rs 2 a unit which was leading to Rs 20 crore (Rs 200 million) a day, that bleed for the Delhi discoms together should get bridged," Lalit Jalan, chief executive officer, Reliance Infrastructure Ltd told CNBC-TV18 Wednesday.
According to Jalan, the power purchase costs have increased by over 300%, while the tariff has been hiked barely by 36% over the last 10 years.
Meanwhile, B K Batra, executive director of IDBI Bank, the largest lender to discoms, told the channel that the hike in tariff will will mitigate the risk for lenders to the power distribution companies to an extent.
"...because of the cost of purchase and other costs being higher than the recovery through tariffs that they have been making, they have been making losses which have been straining their liquidity quite badly. Now if the liquidity strain continues for long, if it does catch up, it poses a risk for debt servicing as well. That is why we are encouraged to see that tariff hikes are being awarded and the distribution companies are able to recover at least a significant portion of their costs," he told CNBC-TV18.
Last month, Crisil Infrastructure Advisory said that Indian power distribution utilities need to raise tariffs by 6.5% per year over the next five years to meet rising costs due to higher fuel prices, as against the average under-5% hike per year implemented during five years ending fiscal 2009-10.
In August 2011, the regulator had raised tariffs by 22%. Later, in February, the tariff was hiked by 5% and by up to 2% in May to adjust the power purchase cost of the distribution companies.
Earlier, last week, India's state-run Damodar Valley Corp warned that it will stop power supply to BSES Yamuna Power and BSES Rajdhani Power, if they failed to make an outstanding payment of Rs 3.31 billion.