The Devendra Fadnavis government has made a tough decision that will directly impact the average Mumbaikar. The chief minister has decided to withdraw the Rs 8,472 crore subsidy granted to all residential and commercial consumers, which will lead to a hike in power tariff by 20 per cent from January next year. This applies to all consumers barring those in the island city.

MERC may hike tariff againApart from this New Year 'gift', the second shocker will come in another few months. The Maharashtra Electricity Regulatory Commission (MERC) is again set to increase the tariff by over 15 per cent from March 2015. The hike will not affect those using agriculture pumps.Ahead of the general elections, the previous state government had offered the subsidy of Rs 8,472 crore in 12 monthly installments of Rs 706 crore each. This was to last till February 2015.

Why was the subsidy withdrawn?Justifying the decision, Fadnavis, who also holds the energy portfolio, had told media persons in Nagpur on Thursday that subsidy was not a solution to reduce tariff. "We will improve the working of state-run power companies to generate more revenue. This will be reflected in the next tariff petition," he was quoted as saying. His government is aiming at a long-term solution to increase power production, as a result of which the per unit cost will automatically come down.

Despite repeated efforts, the chief minister, who was busy with the oath-taking ceremony of new ministers on Friday, could not be reached for comment.Power company speak

Maharashtra State Electricity Distribution Company Ltd (MSEDCL)'s public relations officer Ram Daitonde said, "If the CM himself has given the statement, that means the decision has been taken. However, we are yet to get the details on the hike."

MSEDCL, Mahavitaran had filed a petition with MERC seeking the recovery of an annual revenue requirement of Rs 9,312 crore from April 1, 2014 from consumers. MERC issued an interim order allowing the distributor to recover Rs 5,022 crore in 12 months. But the Congress-NCP government extended the subsidy, stalling the hike.MERC will increase the tariff again when it allows MSEDCL to recover Rs 4,290 crore, the second installment of Rs 9,312 crore. However, this would be done only after holding public hearings.

Industrial tariff to go down?"We will give relief to industries in the next petition," Fadnavis had told reporters in Nagpur. Earlier, the government was thinking about increasing the rate for industries to recover the losses, but after announcing the 'make in Maharashtra' policy, industry minister Prakash Mehta had told dna that the government would reduce the tariff for industries, which is already higher than that of neighbouring states like Gujarat and MP, and was leading to a business drain.