Karnataka Traders Protest Against Hike in Electricity Tariffs

Traders and businessmen across Karnataka observed a bandh on Thursday over the hike in electricity prices in Karnataka. The bandh call was given by the Karnataka Chamber of Commerce and Industry (KCCI) in Hubbali. The bandh in the twin cities of Hubbali and Dharwad received support from 36 trade associations. It was a partial success and saw participation in several districts like Belagavi, Dharwad, Davangere, and Mysuru.

The Karnataka Electricity Regulatory Commission (KERC) approved a hike of 70 paise per unit on May 12 – a day before the announcement of Assembly election results.

Vinay Javali, the president of the Karnataka Chamber of Commerce and Industry said that the government must speak to KERC and request them to roll back the hike. Speaking to NewsClick, he said, “The tariff for the month of May was suddenly increased. When we received the bills in June, we realised that it had gone up by 30%-70%. This happened because the KERC raised the tariffs on May 12 when there was no government. If we look at the HT2A (high tension wires) connections, for example, the fixed charges used to be Rs 265/KVA and the Hubli Electricity Supply Company Limited (HESCOM) had only asked for a hike up to Rs 290/KVA. However, KERC has raised it to Rs 350/KVA. It is an abnormal increase. Secondly, the fuel cost adjustment charges have been hiked from 57 paise to Rs 2.50. Due to these reasons, the electricity bills have shot up by more than 30% and in some cases, by 70%.” 

In Belagavi, traders took out a mock funeral procession of an electric bike, signalling the death of new industries. They maintain that they would become uncompetitive if their production costs increased by a large margin. MSMEs with LT-5 connections in Karnataka are receiving a rebate of 50 paise/unit and the scheme is expected to continue for another year.      

Gopal Reddy, the president of the Federation of Karnataka Chambers of Commerce and Industry (FKCCI), said that a delegation from FKCCI submitted a memorandum to the government on Friday. They have been invited to hold discussions with the government on June 26 for further discussions. Notably, FKCCI did not participate in the bandh called by KCCI.

Speaking to NewsClick, he said, “We have requested the government to reduce the taxes levied on electricity bills from 9% to 3%. We have also asked for incentives (on electricity bills) for those setting up industries in tier 2 and 3 towns. The state budget will be presented next month. We will have a better idea about the allocations made by the government.”

The memorandum submitted by FKCCI says that 565,538 MSME industries (that come under LT-5) are consuming 2238 MU (million units) of electricity, which accounts for 3.51% of power sold in Karnataka. They estimate that 15,613 heavy industries (which come under HT 2A) are consuming 9026 MU of electricity which is 14.16% of power sold in the state. They argue that frequent changes in the tariff would make manufacturing unviable in Karnataka. 

Shiva Shanmugham, the CEO of Shiva Shakti Engineering Company in Bengaluru, is in the business of manufacturing steel barrels. He said that small manufacturing units will be severely impacted by the hike in tariffs. Speaking to NewsClick, he said, “The difference in my electricity bill from the previous month was an increase of Rs 12,000 on fixed charges alone. Over and above this, the rate per unit has also gone up by 70 paise. This is going to take a toll on manufacturing businesses. We have all just recovered from the effect of the Covid-19 pandemic. This hike could have been delayed by another year.”

A delegation from FKCCI is scheduled to meet with the ministers of energy and industry on Monday to hold discussions and attempt to find a way out of the crisis. 

The hike in electricity tariff is unrelated to the Gruha Jyoti scheme (of free electricity up to 200 units) promised by the Congress government in its manifesto. The scheme has not yet been implemented.