New Delhi: In order to tighten the noose around the states using ‘power’ a tool to garner votes, the Central Government has decided not to allot extra funds for development of the power sector.

Several states have been giving free electricity to farmers and permitting power connections in unauthorized colonies.

A new agenda of power reforms is to be implemented by the next financial year.

As per the new agenda, states which fail complying norms like paying subsidy bill, corporatization of power distribution, audit of power may witness deduction in share of power from the Central pool.

As per the sources in the Power Ministry, the new agenda would come into effect with start of the 12th Five Year Plan starting April 2012.

The Central Government has expressed their dissatisfaction on the states’ work in development of Power.

Power Ministry has said that states have not shown any improvement in the field of power transmission and distribution, which has led to the loss of Rs 75000 crore.

Despite the Centre repeatedly expressing concerns over the, the states did not show any impetus in improving the sector.

According to sources, the state government would have to clear the due bill of the power companies from the next year. Moreover, if any state wished to subsidize any section, it will have to pay the bill to the power companies in advance. States paying at least half of the bill could get an extension.

The decision is likely to affect states like Tamil Nadu, Uttar Pradesh, Punjab and Haryana among others. As per an estimate, the total bill of the power companies with states amounts to around Rs 30,000 crore. Experts are of the view that if the bill is cleared the electricity department would find it easier in improving the power transmission and distribution facilities.


After implementation of the new agenda, the state governments would have provided for power subsidy within their annual budget.

In addition, State governments will have to inform the Central Government about audits conducted for power bodies (production, transmission and distribution companies).

It is noteworthy, that 54 distribution companies have been formed in different states. But till date the account audit of only 25 companies have been conducted.

JPN/Bureau