With high domestic power tariffs becoming a political issue in the poll-bound state, Punjab Cabinet on Monday decided to slash power tariff by Rs Three per unit for domestic consumers.

The move, which comes just months ahead of the Assembly polls early next year, will put a burden of Rs 3,316 Crore per year on the exchequer. Making this announcement after the Cabinet meeting, Punjab Chief Minister Charanjit Singh Channi said,” We are reducing power tariff by Rs Three per unit for domestic consumers. It is a big Diwali gift for people,”. He said the decision will come into effect immediately.

The CM said according to a survey conducted by his government, people wanted quality and cheap power. Channi said the state government will soon terminate the power purchase agreements (PPA), which are blamed for high power tariffs in the state, by bringing a legislation in the next Assembly session.

An official spokesperson said the state government will reduce the power Procurement cost and it will be passed on to the consumers. The Punjab State Power Corporation Limited (PSPCL) has issued termination of PPA Notice to GVK Thermal Plant at Goindwal Sahib. This costly power will be replaced with the low cost power from solar and other sources, the spokesperson said.

He said PSPCL has issued default notice to Talwandi Sabo Thermal Plant for failure to give proper supply during last paddy season. This penalty amount works out to be in the range of Rs 600 Crore to Rs 800 Crore.

The spokesperson said PSPCL has allotted two solar companies to supply power to the tune of 250 MW at the record lowest rate of Rs 2.33 per unit. Similarly, PSPCL has allotted 150 MW of solar plants to be established within Punjab at the rate of Rs 2.69 per unit. These plants will be established in the next eight months.

The Punjab government already waived off pending defaulting amount of consumers having connected load of less than two KW. The Punjab government is going to bear this expenditure of Rs 1500 Crore and it will benefit 15 Lakh consumers of the state, especially poorer people.

The spokesperson said to benefit medium scale industries, the government has already reduced the fixed charges by 50 per cent. This will benefit 35,000 medium scale units and expenditure of Rs 150 Crore will be borne by the state government.

The spokesperson said the power tariff reduction will be for domestic sector consumers having connected load upto seven kilo watt (KW). As a result of this, 69 Lakhs Domestic Consumers out of total 71.75 Lakh are going to get benefited, he said adding the existing free power facility upto one KW to scheduled caste, other back class and below poverty line categories will continue.