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Prospective Removal of Cross subsidies from Industrial Consumer: A Boon or Ban!

Proposal for revoking cross subsidy charges is a very welcome move for industrial consumer for power prices will go down substantially resulting in increased profitability. However,  Govt should be careful in implementing the same with a measure to safe guard interest of all the value chain partners, unless it will impact everyone including itself, domestic pool, DISCOMS, IPP’s and Trading & Exchange companies. Industries will be relieved to get rid of the cross subsidies but it opens the gate for them where they might dishonor the PPA’s under open access as they will prefer buying from grid which might turn IPP projects completely unviable.

If Govt bears the burden it will ultimately widen its fiscal deficit and if the larger mass is provided electricity without any subsidy it will affect the DISCOM’s who already have their hands full with burgeoning AT&C losses. Govt needs to take a balanced approach where industries get some benefits but other value chain partners do not take the toll as well.