Just when things in the power sector looked better, in the sense that chief ministers like those in Uttar Pradesh signed on to the Centres proposed reforms in return for a bailout package, it appears the chief minister is having second thoughts. When the UP Power Corporation proposed a 15-20% hike in power tariffs, the chief minister was asked for an okay before it was sent to the regulator. He has, FE reported, asked the states chief secretary and other officials to study its impact, probably since his father, and SP party chief, has told the cadre to prepare for general elections in September.
It would, however, be a good idea not to read too much into the matter. For one, state regulators have now been told in no uncertain terms that they need to do their jobswhich means, they have to push the UP Power Corporations to try and balance their books and for states to pay up their dues for subsidy payments made to farmers or households. Two, since UP needs increased supplies of electricity if it wants to attract industry, or even to woo voters in the event of a September election, the state has no option but to sign on to the power reforms package. It is possible that, over the medium term, as has happened in all such power reforms packages in the past, the state will default on its commitment. But, for now, chances are the chief minister and his party will come around to okaying the need for a hike.