Why consumers have to pay high rates for power in Rajasthan

In Rajasthan, people pay one of the highest rates for power. The natural disadvantage of being located far away from coal resources resulting in power purchasing cost of Rs 4.81 per unit, highest in the country along with UP, is not the only reason. The interest burden of discoms’ loans is another major reason. In fact, at Rs 1.40 per unit of power, the interest paid by discoms for its loans is the highest in the country.

Recently, the board of state energy department decided to exit from high power purchase agreements to bring down the cost of power. Also a proposal from the Rajasthan Vidyut Utpadan Nigam Ltd for retiring two units of Kota Super Thermal Power Station having 220 megawatt pending with the government.

In the past financial year, discoms used cheaper electricity from power exchanges and brought down the purchasing costs by Rs 20 paisa per unit but the impact of legacy burden and natural disadvantages is too large to pass on the benefits to the consumers. But more such strategies are being discussed to reduce the power tariffs in state which are one of the highest in the country.

TOI analyses the causes as to what led to the spike in power rates in the state and why it is proving difficult for the government to provide relief.

High power purchase cost:
This contributes nearly 80% to the total cost of supply of the discoms. The conventional thermal power plants have been using coal transported from outside the state and the high logistics cost is making power generation expensive.