Cash-strapped Gujarat municipalities default electricity bills

Cash-strapped Gujarat municipalities default electricity bills

The state-run discoms have stopped supplying electricity; the municipalities have pending bills of about Rs 316 cr

Multiple municipal towns in Gujarat have been transcending into darkness with dusk because of no power supply to streetlights for about a month now.

The state-run electricity distribution companies (discoms) have stopped supplying electricity for streetlights, water supply and public offices to these municipalities. The municipalities have pending electricity bills, some of which have been due since 2014.

“Almost all the municipalities in Gujarat have unpaid electricity bills. After repeated notices, the municipalities have failed to act. Hence electricity supply is being cut off in phases, starting with snapping power supply to streetlights,” said an official working in the state run power distribution company. He added that some municipalities have begun to pay after power supply to streetlights were cut off.

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Currently, electricity supply for streetlights to Balasinor, Godhra, Borsad in Central Gujarat, Bharuch and Narmada in South Gujarat, Viramgam in North Gujarat and Morbi, Anjar, Bhuj and Botad in western part of the state has been cut off.

Of the 19 municipalities in South Gujarat, only two districts – Bharuch and Narmada have outstanding bills to be paid to Dakshin Gujarat Vij Company Ltd (DGVCL). Rest of the districts are regular with the bill payment, informed an official of DGVCL.

Paschim Gujarat Vij Company Ltd (PGVCL), which distributes power in western Gujarat and Saurashtra region, has disconnected power supply to 20 municipal towns since January this year. PGVCL has also been snapping power for water supply to the districts. Out of these districts, Morbi, Anjar, Bhuj have perennial issue of water scarcity especially during summer.

62 local bodies owe Rs 316 crore to PGVCL

In all, 62 municipalities, where PGVCL is the power distributor, owe the company Rs 316 crore with some of the towns defaulting since 2014. Noticeably, in 2014, PGVCL had waived off the interest of the outstanding electricity bills after which the Municipal Finance Board and urban development authorities had cleared the dues.

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In North Gujarat, Uttar Gujarat Vij Company Ltd (UGVCL) had calculated an outstanding electricity bill of Rs 58.7 crore as of January 31, 2023. Madhya Gujarat Vij Company Ltd (MGVCL) that supplies power to central Gujarat has an outstanding due of Rs 82 crore till January 31, 2023. “Letters have been sent to municipalities like Sanand and Prantij before we take any action,” said an official of UGVCL.

Officials of Viramgam municipality in North Gujarat, were forced to hire a generator after the power supply to the town’s government offices was cut by UGVCL following several notices. The municipality owes Rs 13.87 crore in outstanding bill stretching over past several years.

Women refrain from venturing out after dark

In Godhra, women have restricted their movement to day time as Madhya Gujarat Vij Company Limited (MGVCL) has cut off power supply to streetlights. The municipality owes an outstanding bill of Rs 8 crore over two years.

Godhra municipality has no money to pay MGVCL dues, claim the officials of the municipality. “We have paid Rs 5 lakh and asked them to restore the power supply immediately so that residents don’t face issues,” said Godhra municipality president Sanjay Soni.

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Noticeably, most municipalities across Gujarat have stated that the rate of taxes and other charges along with the amount of recovery is not enough to fulfill their financial needs. “The bills have been due for over years now as there has always been cash crunch due to non- payment of taxes in Balasinor,” said an official of the municipality.

Limited resources to blame: RBI report

Meanwhile, an RBI analysis of urban local bodies reveals that combined budget of all the municipal corporations of India put together is much smaller than that of Central and State budgets.

The report, titled ‘Report on municipal finances’, states that municipal corporations are increasingly being dependent on State and Central revenue as their income is limited. The revenue collection powers of the municipalities are being curtailed, even as 70 per cent of their funds get spent in salaries, pension and administrative expenses, leaving a small amount for capital expenses, said the report.

The report further holds that the revenue earned through the collection of taxes is inadequate to meet the expenditure needs of the municipalities. Another issue with the municipalities is that they depend primarily on property tax which is not efficiently collected, the report added.

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