Patna, Feb. 14: A stand-off between two wings of the state has led to an order withdrawing the exemption on power tariff granted to industries under the government's policy to encourage investments, punching holes in the Nitish Kumar administration's claims about offering initiatives to entrepreneurs.
Bihar State Power (Holding) Company Ltd issued a letter (a copy of which is with The Telegraph) last month instructing its general managers in charge of its seven supply areas to stop extending benefits to industries.
According to the industrial policy implemented on July 1, 2011, entrepreneurs are entitled to power tariff exemption under the annual minimum guarantee (AMG) and monthly minimum guarantee (MMG) schemes.
Before the policy came into being, the firms concerned had to pay minimum charges on the use of electricity irrespective of consumption. "But the 2011 industrial policy stipulates that the firms have to pay the charges only against the units used," said a source in the energy department.
But referring to Section 65 of Electric Supply Code of 2003, the letter says the government is supposed to pay in advance to the power company the amount given as relief to industries. The letter, dated January 7, 2013, and signed by K.K. Verma, secretary, Bihar State Power (Holding) Company Ltd, says since the agency has not received any money from the government on account of the concessions/rebate being given to the entrepreneurs for 2012-13, it was putting on hold the exemptions till further orders.
The letter also says that the power company would charge from entrepreneurs a delayed payment surcharge till it receives the money from the government.
A top power company official pegged the amount due to it at Rs 60 crore.
Industrialists are incensed by the order and questioned the wisdom of invoking a 2003 rule when the policy was laid down in 2011. "If the power holding company had an issue of dues with the industries department, it should have taken up the matter with them. Why is it penalising us?" asked an entrepreneur, who did not wish to be named.
The government appeared to be speaking in two voices. Industries minister Renu Kumari said her ministry had made the due payment to the energy department. But energy minister Bijendra Yadav said no payment had been received.
According to the Industrial Incentive Policy of 2011, the energy department or any of its wings cannot hold back the benefits extended to entrepreneurs.
Energy minister Yadav initially told The Telegraph that the exemption had not been withdrawn. "The exemption has not been withdrawn, rather the industries department has not paid the amount to Bihar State Power (Holding) Company Ltd till date," he said. "From where will the power company get the money…This is a matter between the power company and the industries department."
When pointed out that the power company had issued a letter withdrawing the exemption, the minister said: "I don't have to make any comment on the issue."
Industries minister Renu Kumari told The Telegraph that it was a case of "misunderstanding" and that the payment had been made.
"The issue has come to light but I want to say that the department has already paid the Bihar State Power (Holding) Company Ltd. There seems to be a misunderstanding and I have directed my department officials to look into the matter and find a solution," she said.
Deputy chief minister Sushil Kumar Modi took exception to the Power (Holding) Company letter during a pre-budget meeting on February 4. "The issue has been brought to my knowledge…I would certainly talk to the chief minister in this regard. The government has seriously taken the issuance of the letter by the power company when there is a clear-cut policy not to charge AMG and MMG in the industrial incentive policy of 2011," Modi said.
Satyajit Kumar, vice-chairman of the eastern region of the Confederation of Indian Industry (CII), called it a failure of the rule of law in the state.
"I am an industrialist and the Industrial Incentive Policy of the state is the most sovereign commitment for us. Now, if one department or departments stop following it, it can be seen as a failure of the government's functioning and abilities. The government has got some serious explaining to do," he told The Telegraph.