Private sector already sees the draft domestic electricity policy as a stumbling block
Policy: Juxtaposing the government’s drive to promote rural economy, should the draft domestic electricity policy materialize, it would impede the growth of cottage, small and medium industries in rural areas.
The draft policy aims to rationalize subsidy and “all non-residential” low voltage (LV) customers would be slapped the tariff of highest LV block, the representatives from the private sector and Bhutan Chamber of Commerce and Industries (BCCI) pointed out in the draft.
Private sector representatives from the various businesses met yesterday to discuss the policy for the consultation meeting with the government on October 16. They discuss literally almost every line of the 11-page draft policy at a session that lasted half a day.
“Unless a farmer operates a diary farm inside his residence, the farmer would have to pay for the highest LV Block,” a representative from the private sector said.
Another representative said 100 units of free electricity do not address the issue of urban poor. He said the subsidy should be based on consumption instead of giving it to the rural households.
Less consumption meant less electrical appliances, indicating that these households are poor. “Even in rural areas there are people who have all the electrical appliances and can afford to pay while there are poor people in urban who barely survive on their income,” he said.
To keep the domestic tariff lower than the export tariff, the draft policy states that plants with cheapest generation cost be allocated for domestic supply. However, industrialists said the plant with cheapest generation cost is Chukha hydropower since it has already liquidated its loans. But Chukha earns the highest export tariff of Nu 2.25 a unit and this would hamper the government revenue.
When Punatshangchhu I, II and Mangdechhu come on line, the government would have about 2,883 million units a year at its disposal. In monetary terms it works out to Nu 6.8B. A Thimphu based industrialist said that even if the government gives free energy to all LV and MV customers, it would still have energy worth Nu 3B.
“Instead of throwing a blanket statement in the policy that HV are not eligible for subsidy, it must keep its doors open, if the government thinks is in the interest of the economy,” he said.
As per the draft, utility companies like Druk Green Power Corporation and Bhutan Power Corporation, have to implement the national plans as directed by the government. But the recovery of the investment made to implement the plans shall be allowed in the tariff cycle and for those plans, which are not utilized, the cost would be spread across all categories of customers.
“Why should the customers pay for the bad investments made,” said an industrialist. “Whoever asked them to invest, should pay for it.”
For instance, a 20MW substation is constructed at Haa when the demand is less than five MW. “Who should pay for this mistake,” he said. Sub-stations at Jigmeling for industrial estates are not being used currently and it is not fair to recover this cost from the customers. Like wise the industrialists are also of the view that investments and loans availed for rural electrification should not be passed on to the industries.
The private sector representatives also discussed on the need to move from cost plus pricing model to price cap to improve the efficiency of the utilities companies.