Raising tariffs will not solve the problems of power distribution companies, said Piyush Goyal, Minister of State (Independent Charge) of Power, Coal and New & Renewable Energy, here on Wednesday.

“I do not believe what many reformists tend to say that you have to increase the tariffs (power rates) to resolve the problems of the distribution utilities (discoms)…it is a completely flawed logic. Increasing tariffs will never set your discoms right,” he said.

But, he also equally quickly pointed out, that this does not mean the government is endorsing a “suppressed tariff.” “I am never suggesting even once that there should not be a tariff increase. Tariff setting is the prerogative of regulators…

“If there are States where tariff has not been corrected, sometimes because of political interference, then that will have to be corrected going forward.

“We are trying to introduce an innovative way to increase these tariffs gradually so that they don’t burden the people immediately with massive jumps,” Goyal said at an interaction session with journalists at Indian Women’s Press Corps.  The issue of stressed State electricity distributors — running out of cash and struggling to repay loans, in turn squeezing banks — has been troubling the government with Ministries of Finance and Power trying to work a way out.

The main concern of the States, whose utilities need to be bailed out, is over the Centre’s thinking of transferring debt to them and asking them to issue bonds to service the same. Goyal said that the final package will be brought out only after all States are on board. He expects a decision soon.

“I have already had several rounds of discussions with Jharkhand, Tamil Nadu, Andhra Pradesh and Telangana. And I am meeting the officials of Tamil Nadu again on Friday,” he said. Tamil Nadu is yet to accept the Centre’s package.

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