Rajasthan: State cos cannot buy cheaper exchange power due to high taxes, restrictive norms

After Maharashtra, the power cost for Rajasthan industries is highest in the country which reduces their competitiveness

JAIPUR: Despite cheaper power available on the Indian Energy Exchange (IEX), companies from Rajasthan are unable to take advantage due to higher cross-subsidies and additional surcharges besides wheeling charges they have to pay.

According to Rohit Bajaj, head-business development and senior vice-president of Indian Energy Exchange, the average power rates on the exchange during the current year was Rs 2.60 per unit, while industry in the state pays over Rs 8.


“We don’t have many companies from Rajasthan buying power from us. In Tamil Nadu, 1,000 companies are registered with us and 400-450 companies buy power from the exchange on daily basis. Whereas 15-20 companies from Rajasthan tap the exchange power,” said Bajaj.

After Maharashtra, the power cost for Rajasthan industries is highest in the country which reduces their competitiveness. Besides cross-subsidies and additional subsidies, which come to around Rs 2.60 per unit, there are restrictive conditions imposed by Rajasthan Energy Regulatory Authority (RERC).

The restrictive rules ensure that companies are bound to buy power from open access sources like the IEX a fixed quantum for eight hours. But in reality, their demand keeps changing because of their operational dynamics. Secondly, they have to take it for 24 hours. These conditions by RERC are specific to Rajasthan. If a company wants to buy less than 1 MW, it is not allowed.

In an event on Tuesday by FICCI, Rohit Gupta, managing director, Rajasthan Urja Vikas Nigam Ltd, said, “Electricity cost is a major input to the overall cost of industries. Electricity cost in Rajasthan is higher as compared to other states due to the financial position of the discoms which is linked to the consumer mix of the state. The department is planning to look into areas like access to rebates, making timely payments to the generators, operational efficiency of thermal plants, etc. to reduce the overall procurement cost.”

Based on an assessment of large electricity intensive industries, it is estimated that procurement of cheaper electricity through open access can lead to potential cost savings of up to Rs 3,000 crore for industries in Rajasthan.

Ashok Kajaria, chairman, FICCI Rajasthan said that as industrial activity resumes after COVID, there is a need to fight the slowdown and attract new investments to the state. “For this, the reduction of operating cost especially expenses on electricity can help in the growth of industries. Rajasthan can look into the best practices being adopted by other states,” added Kajaria.

Source :- ETEnergyworld


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