The new electricity tariff cycle that comes into effect this month will benefit over 197,000 rural households in the country.
The government has maintained the rural subsidy of 100 units free electricity per month and has introduced a new subsidy of 200 units free for the highland communities.
Economic affairs minister, Loknath Sharma, during a press conference yesterday said that the move was to deter the use of fuel wood for heating and cooking purposes in the rural communities and improve their living standards.
The living conditions in the rural areas are unforgivingly harsh, he said, adding that the risk of respiratory ailments and other health issues increase while burning the fuel wood. “Such issues become more accentuated as one goes deeper into the rural hamlets especially in the highland areas like Merak, Sakteng, Laya and Lingzhi.”
The minister said that the electricity tariff for this cycle was in consonance with the government’s pledges towards developing an inclusive, sustainable and equitable economy. “I see this cycle as a people centric electricity tariff for better life.”
He said that the benefits accruing out of the hydropower revenue is spread more to lower echelon of the population, so that they do not only meet the current needs comfortably but also use the energy in a productive matter.
The government has also maintained the same tariff for the low voltage (LV) block I at Nu 1.28 per unit while increasing the range from 300 units to 500 units in the LV block II. Subsequently, for block III the celling has been increased above 500 units from 300 units in the previous cycle. Increasing the range means more benefits for the users. In the LV block II, there is a benefit of 200 units.
The rate in LV block II has also been maintained at Nu 2.68 per unit. For block III the rate starts from Nu 3.57 with an annual increase of Nu 0.03 to 0.04 in the following two years.
The minister said that the new cycle doubly benefits majority of the average urban domestic users as many of them fall under the LV block I and block II. They can use more units at the same existing rate, he said.
“The government remains conscious of the urban poor people who find difficulty in making ends meet,” he said.
Lyonpo said that the initiative was also to promote cottage and small industries in keeping with the 12th Plan objectives. “We have approved block II and above tariff for CSIs with the intent to galvanise young entrepreneurs in taking up CSI activities in rural areas, create employment opportunities and reduce rural-urban migration.”
Meanwhile, the tariff in the medium voltage (MV) was increased by an average of 10 percent annually, which is the highest increase in this tariff cycle.
The minister said that although high, if the government had not provided the subsidy, the tariff in this group would have increased by 26 percent annually affecting those involved in these sectors.
While allocating subsidies, the government had given serious consideration on gradually phasing off such subsidies and rationalising electricity tariff rates in the long run, the minister said.
“The way forward would be to work towards long term power purchase agreements with industries, containing cost of supply for medium voltage consumers and channeling revenue energy to domestic economy,” he said.
It was also learnt that the government has approved Energy Efficiency and Conservation Policy recently, which would provide ways ahead in using the technologies, and production means to reduce energy intensity.
“Future lies in making our economy competitive through using smart technologies and infrastructures that saves energy,” said the minister. “The government will also be exploring other alternative renewable energy resources and technologies in meeting the primary energy requirement.”
The government has approved subsidy allocation of Nu 1,478.57 million for the current cycle.
The government gets royalty energy of 15 percent from whatever the hydropower plants generate. The government uses this amount to subsidise the cost.