Gandhinagar: The Reserve Bank of India in its latest report, ‘State Finances: A Study of Budgets of 2011-12’, has identified Gujarat as one of the states where power sector reforms, despite being initiated early, have failed to create the “desired impact” on the financial position of the state power utilities (SPUs). The report says, “Subsidies to SPUs/State Electricity Boards (SEBs) have been rising over the years for Gujarat and Karnataka, which had unbundled utilities”, calling it a “growing area of concern.” Particularly blaming “huge cash losses” for the SPUs on “non-revision of tariffs over extended period of time,” the RBI report adds that such losses, coupled with simultaneous “non-realization of subsidies from the state government”, is leading to a situation where deterioration in financial performance of SPUs has “significant implications for state finances”. The report further regrets the fact that the arrears on subsidy are “not captured in state budgets”, which has further contributed towards making the situation worse. Being projected as a model state for power reforms, Gujarat has lately seen a rise in subsidy bill because of the refusal of the state government to revise the tariff for its agricultural consumers. The figures provided by the latest comptroller and auditor general (CAG) report shows the subsidy bills of the four power distribution companies (DISCOMs) – for North, South, Central and Western Gujarat – rising. There is an increasing failure on the part of the state government to pay the full subsidy amount. In 2006-07, for instance, Rs 1,830.19 crore was due to be paid to the DISCOMs as subsidies. The amount reached Rs 2,862.90 crore in 2010-11. CAG commented, in none of the years, starting with 2006-07, the subsidy due to the four DISCOMs was received from the government in the year itself. And if by the end of fiscal 2006-07, the unpaid subsidy was Rs 72.16 crore, it reached Rs 938.63 crore at the end of March 2011. In fact, CAG cites Gujarat Electricity Regulatory Commission (GERC) order of 2004, which makes it mandatory for the DISCOMs to meter all farm consumers, which should go a long way in reducing subsidies. While South Gujarat’s DISCOM progress of metering unmetered connections was very slow, i.e. 3.52 per cent over a period of five years (2006-11), in the western region, in Saurashtra and Kutch, the situation was worse. It said, “The number of unmetered consumers in the region increased from 2.58 lakh to 2.59 lakh in 2010-11”, adding, “Abnormally high consumption by unmetered consumers in comparison with metered consumers is indicative of gross misuse of energy by unmetered consumers on account of negligence, theft, unauthorized connections and overloading”. This leads to “high incidence of transmission and distribution loss in supply of power”. Asking the government to implement cent per cent metered connection in agricultural sector at the earliest, CAG said, the DISCOMs for western Gujarat suffered a huge loss in 2006-11 because of unmetered farm connections, adding, it is “untenable” to say that the state government did not go in for cent per cent metering of far connections because of “staff resistance from farmers”. The unmetered connections are based on horse power (HP) tariff, charged at the rate of Rs 1,680 per HP per annum. However, the farm consumer has to pay just Rs 665 per HP per annum if the motor is up to 7.5 HP, and Rs 805 per HP per annum in case the motor is more than 7.5 HP. Rest of the amount is paid by the government as subsidy. Further, the unmetered consumer invites cent per cent subsidy towards fuel cost adjustment charges.