MERC freezes govt's plan to write-off Bhiwandi arrears

MERC freezes govt's plan to write-off Bhiwandi arrears
Vinu Lal

February 23: The Maharashtra Electricity Regulatory Commission (MERC) has for the time being blocked the state government's decision to waive arrears owed by Bhiwandi powerloom owners amounting to around Rs 100 crore. The MERC, a quasi-judicial body set up under the Electricity Regulatory Commission Act 1998 in September last year, has instead directed the Maharashtra State Electricity Board (MSEB) to refer the issue to the commission before taking any decision since the board's tariff review proposal is also pending with it.

The direction follows a hearing on Tuesday on a petition filed by the Mumbai Grahak Panchayat, which has demanded that the state government be made a party to the proceedings of MERC fearing political tinkering with the board on tariff decisions at a later stage.

The MERC order says a detailed hearing will take place on February 29 to consider these aspects in detail as Tuesday's hearing was able to address the waiver of arrears in the Bhiwandi issue only. In fact, the Bhiwandi issue was introduced precisely to illustrate the fact that the state government's intervention in policy matters results in huge losses to the board.

A strongly-worded order issued by the MERC says: ``... On being pressed by the commission to specify that they would not take such a decision to waive the arrears since the MSEB tariff proposal is pending before the commission, the MSEB declined to state so positively...''

Last month, the state Energy Minister Dr Padamsinh Patil had announced with much political fanfare that 55 per cent of the arrears from powerloom owners in Bhiwandi would be waived.

Though the minister's public announcement was made in January, the MSEB was officially intimated of it only on February 11. A letter from the Department of Energy to the MSEB states that the latter has to take an ``appropriate decision'' on the matter. Interestingly, the letter directs the MSEB ``to take proper action to the scheme which enables the powerloom owners to pay up just 45 per cent of the cumulative arrears till March 31, 2000, in three equal installments''.

However, the MERC's intervention in the issue is still the subject of much debate, with experts wondering whether the state government is bound to follow the commission's decisions.

This is because the huge losses that the MSEB may incur due to waiver of arrears would have a direct bearing on tariffs and it is under the purview of the MERC to decide on this issue. On the other hand, other experts argue that the government can still go ahead with waiving arrears as this will not affect tariffs but only the revenues of the board. Therefore, the February 29 hearing assumes significance since the stance to be taken by the commission is crucial.

This decision will also be a reckoner for all future interventions of the MERC on the state government's ``policy directions''.

A mob of loom owners led by local MLA Abdul Rashid Tohir Momin laid seige to the MSEB office in Bhiwandi, gheraoing staff and locking them in the office today. They were demanding further subsidies and write-offs from the MSEB. Enraged by their behaviour, MSEB unions have decided to proceed on a week-long leave in protest.

According to Bhandup circle chief engineer Pramod Majumdar - under whom Bhiwandi falls - more than 70 per cent of the 150 million units of power being supplied to the township go unpaid for. "At Rs 3.00 per unit we should be making at least Rs 45 crore every month but we make only 15 crores per month," he explained adding, "even our intensive drive at raising collections has yielded only Rs 20 crore in December 1999."