New Delhi: Electricity charges in Delhi may drop to as low as ₹ 1.50 per unit, according to plans unveiled on Monday by the new Aam Aadmi Party (AAP) government, which wants to set up a coal-fuelled power project dedicated to meet the demands of consumers in the national capital.

The plans involve securing a coal block from the coal ministry and then setting up a 4,000 megawatts (MW) plant in the fuel bearing state, said Delhi’s power minister Satyendra Jain.

“We want a coal block to be reserved for Delhi. We know the cost of generation can be as low as 70 paise per unit. Adding the transmission charges for bringing the electricity to Delhi, the final tariff can be as low as ₹ 1.50 per unit for a 25-year PPA (power purchase agreement)," Jain said.

Jain referred to the low tariffs at Reliance Power Ltd’s 3,960MW Sasan ultra mega power project (UMPP) in Madhya Pradesh, where the company is committed to selling power at ₹ 1.19 a unit. “It is possible, though people get surprised. We will do it," he said.

At the moment, electricity tariffs in the capital start at ₹ 4 per unit for consumption of up to 200 units, going up to ₹ 5.80-5.90 per unit for 200-400 units, ₹ 7.30 per unit for 400-800 units and higher for more consumption. The exact rates vary according to the electricity provider.

The main reason Delhi continues to suffer from power shortages is that only a small amount of the state’s average demand of around 3,600MW is generated by plants owned by the Delhi government. This leaves the state vulnerable, especially in peak usage periods, when all the other states are also scrambling to buy power.

The AAP demand for a coal block to be reserved for Delhi comes in the backdrop of the National Democratic Alliance (NDA) government’s plans to auction or allot 110 coal mines. Of these, 65 will be auctioned and 45 allotted to state-owned firms, in a process to be completed before the end of the current fiscal. The 110 mines up for grabs have around 350 million tonnes (mt) of reserves. Of these, 42 blocks with a production capacity of 90 mt are operational.

A senior government official confirmed the Delhi government was trying to secure a dedicated coal block.

As part of its attempts to meet the electricity demand of Delhi, AAP also plans to tap renewable energy sources and aims to set up 2,000MW of solar capacity by 2025. Under the initiative, solar panels will be installed on the roofs of bus-stops.

“We will give incentive for roof-top solar," Jain said.

While India has an installed power generation capacity of 255,012.79MW, renewable power has a share of only 12.42%, or 31,692.14MW.

The AAP plan comes in the backdrop of the Comptroller and Auditor General of India (CAG) auditing the private electricity distribution companies of Delhi—BSES Rajdhani Power Ltd (BRPL), BSES Yamuna Power Ltd (BYPL) and Tata Power Delhi Distribution Ltd (TPDPL). The audit was ordered by the AAP during its 49-day stint in power in 2013-14. The other discoms in Delhi are: Military Engineering Services (for Delhi Cantonment) and New Delhi Municipal Corporation.

The party had said at the time that there would be no tariff hikes without a proper audit and claimed that the discoms, privatized in July 2002, were profiting at the cost of consumers.

The AAP won a two-third majority in the Delhi assembly elections held earlier this month. This time, too, one of its main campaign promises was lower electricity tariffs.

“We have said cheaper electricity and not free electricity. The (current) costing is irrational and the electricity tariff will be reduced by half," Jain said.

Capital expenditure costs are estimated to contribute 20% of the electricity tariff charged from the consumer, with power purchase costs accounting for the rest 80%. While state-owned Delhi Transco Ltd (DTL) procured power for Delhi earlier, since 2007 this job has been carried out by the distribution utilities through the Delhi Power Procurement Group comprising representatives of power distribution companies and DTL.

During its campaign for the assembly polls, the AAP alleged the audit of discoms by CAG had been put in “cold storage" after the Bharatiya Janata Party came to power at the centre.

In its previous stint, the AAP minority government had offered to take over the functioning of the distribution utilities and also suggested the appointment of its officials as administrative officers for these utilities. The BSES discoms had also sparred with the AAP government over tariffs, with the then government announcing a 50% cut in electricity tariffs for households consuming up to 400 units of power per month.

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