KCCI opposes power tariff hike proposal by MESCOM, writes to CM

Mangaluru, Jan 05, 2020: Kanara Chamber of Commerce and Industry (KCCI) has requested Chief Minister B S Yediyurappa to withdraw the proposed increase in electricity tariff.

KCCI president Isaac Vas has submitted a memorandum through a letter on Tuesday expressing concern over MESCOM’s decision to increase the tariff by ₹1 per unit.

“We wish to bring to your kind notice the startling decision of MESCOM to propose an increase in Power tariff by ₹ 1 per unit. But BESCOM has not increased tariff and even proposed a reduction for HT Industrial consumers. MESCOM’s proposed increased Power tariff will fatally affect the consumers of Dakshina Kannada, Udupi & Shimoga Districts,” he said in the letter.

Adverse impact on MSMEs:

1. In India, the MSME sector is the second-largest employment generator after agriculture and acts as a breeding ground for entrepreneurs and innovators with considerable support in strengthening business ecosystems. The MSME sector has contributed 29% to the overall GDP.  In DK District over 1 lakh are employed in this sector while the large industries employ less than 10,000 people.
2. With the Covid19 pandemic and Lockdowns impacting their cash cycles, MSMEs which are the backbone of India’s inclusive growth story, have felt a significant blow and faced severe bottle-necks & retardations. As an essential part of the domestic and global value chains, the plight of MSMEs is of deep concern.
3. The country-wide lockdown announcement dragged MSME owners, employees, and external stakeholders to unexpected repulsions, where no one had the experience handling this kind of situation. Extended lockdown hurt the supply of finished goods, procurement of raw material, and employees’ availability to work in production and supply processes. Post-Lockdown MSMEs face challenges related to debt repayments, wages/salaries, statutory dues, etc. 

ADVERSE IMPACT ON COMMON MAN

1. It is not only the MSME units that faced challenges; even consumers have lower disposable income. Many enterprises laid-off their workers because of the inability to pay salaries, vacated their offices due to incurring expenses, and halted their production due to curtailed demand.
2. Instead of exerting pressure on ESCOMs to reduce their distribution losses and overheads and be more efficient, the present hike rewards inefficiency in the distribution of power and will allow such inefficiencies to continue.
   We wish to inform you that the MSME sector will completely collapse if the power tariff is hiked. We request that the MESCOM reduce their distribution losses and overheads instead of putting an additional burden on the consumers. The hike’s impact will be particularly disastrous for the MSMEs as they struggle to revive operations from the COVID pandemic and severe slowdown in the economy.
   Therefore, we request you to nip the proposal in the bud and kindly instruct the MESCOM to withdraw the proposal with immediate effect.
   A copy of the memorandum has also been sent to Minister Kota Srinivas Poojary, Chief Secretary, Power Secretary, MPs Nalin Kumar Kateel, Shobha Karandlaje, and B.Y. Raghavendra.

Need for efficiency in ESCOMs

1. Apart from this the recently enacted Electricity Consumer Protect Act has made a draconian change in capping net billing to 10 KW and thus furthering the inefficiency of ESCOMs. The ESCOMs buy power at around Rs.3.00 per unit from Solar installations and sell them around Rs.7.00 per unit i.e., over 130% mark upon the purchase price. Industries need to go in for more rooftop solar installations and benefit from unlimited net billing. This will not only help industries to be globally competitive but also pressurize ESCOMs to be more efficient. In this manner, we can reap the benefits to the environment and contribute to meeting the Paris Accord targets.
2. KERC Chairman and most of its members are retired officers of ESCOMs and KERC being the approving authority for increasing tariff, this set up amounts to “CONFLICT OF INTEREST”. Industry bodies and Professional bodies should have a suitable representation in the KERC Board. This will allow KERC to advise ESCOMs to follow best practices of distribution and efficiency in power management rather than give in to their demand for an increase in tariff at the drop of a hat.