Twenty-three years ago, acting on the advisory directives tied to a loan from the Asian Development Bank, the Madhya Pradesh Electricity Board was unbundled into three distinct corporate entities. The stated objective was to eliminate the Board's financial losses. Today, over two decades later, the reality is stark: a deficit that stood at 2,100 crore rupees has ballooned to a staggering 50,000 crore rupees.
This catastrophic mismanagement and administrative negligence within the power companies are being compensated for through the pockets of ordinary consumers. While electricity tariffs are officially set once a year, the provision for Fuel Cost Adjustment (FCA)—intended for emergency fluctuations—is being exploited as a loophole to hike prices every three months.
As of April 1, 2026, new electricity rates have come into force in Madhya Pradesh, marking a 4.8 percent increase. This hike, approved by the Madhya Pradesh Electricity Regulatory Commission, is anchored in a 6,044 crore rupee revenue deficit reported by the distribution companies (DISCOMs). Though the companies initially demanded a 10.19 percent hike, the approved increase still places a heavy burden on nearly 1.9 crore middle-class and high-consumption users.
As of April 1, 2026, new electricity rates have come into force in Madhya Pradesh, marking a 4.8 percent increase. This hike, approved by the Madhya Pradesh Electricity Regulatory Commission, is anchored in a 6,044 crore rupee revenue deficit reported by the distribution companies (DISCOMs). Though the companies initially demanded a 10.19 percent hike, the approved increase still places a heavy burden on nearly 1.9 crore middle-class and high-consumption users.
This situation not only widens economic inequality but fundamentally challenges the principles of energy justice. It is particularly ironic that rates are climbing even after the central government abolished coal surcharges, rationalized GST rates, and removed the mandatory requirement for expensive Fuel Gas Desulfurization (FGD) technology in thermal plants.
The landscape of power procurement in the state remains a hotbed of controversy. In late January 2026, the state government signed a massive agreement with private firms for 4,000 MW of power at a rate of 5.83 rupees per unit. Experts warn that this contract will force the state’s power companies to pay an additional one lakh crore rupees over the next 25 years—a burden that will inevitably fall on the consumer.
The landscape of power procurement in the state remains a hotbed of controversy. In late January 2026, the state government signed a massive agreement with private firms for 4,000 MW of power at a rate of 5.83 rupees per unit. Experts warn that this contract will force the state’s power companies to pay an additional one lakh crore rupees over the next 25 years—a burden that will inevitably fall on the consumer.
The All India Power Engineers Federation points out that while the state's peak demand is 14,500 MW, it has already signed Power Purchase Agreements (PPAs) for 21,000 MW. With a surplus of power projected for the next decade, these expensive new contracts appear entirely unnecessary.
This cycle of expensive procurement and systemic inefficiencies—such as line losses, power theft, and outdated management—is stifling both domestic households and industrial competitiveness. CAG reports have repeatedly questioned the policies of the Power Management Company, the state’s nodal procurement agency.
This cycle of expensive procurement and systemic inefficiencies—such as line losses, power theft, and outdated management—is stifling both domestic households and industrial competitiveness. CAG reports have repeatedly questioned the policies of the Power Management Company, the state’s nodal procurement agency.
Between 2020 and 2022 alone, the government reportedly paid private companies 1,773 crore rupees as "fixed charges" without purchasing a single unit of electricity. Furthermore, while the market rate for power has dropped significantly, the state remains shackled to older, high-cost contracts signed between 2010 and 2015.
The disparity is most visible when comparing neighboring states. For a monthly consumption of 200 units, a resident in Madhya Pradesh pays approximately 1,425 rupees, whereas a consumer in Chhattisgarh pays 900 rupees and in Gujarat, only 785 rupees. This 15 to 25 percent surge in domestic bills is crippling household budgets.
The disparity is most visible when comparing neighboring states. For a monthly consumption of 200 units, a resident in Madhya Pradesh pays approximately 1,425 rupees, whereas a consumer in Chhattisgarh pays 900 rupees and in Gujarat, only 785 rupees. This 15 to 25 percent surge in domestic bills is crippling household budgets.
The irony remains that the very reforms initiated in 2003 to curb losses have led to a deficit that has soared from 2,100 crore to over 71,000 crore rupees by March 2025. Energy is the bedrock of economic progress, yet in Madhya Pradesh, a lack of transparency, weak regulatory oversight, and a blatant disregard for public interest have turned a basic necessity into an unaffordable luxury. The government has consistently prioritized private contracts over the welfare of the common citizen.
---
*With Bargi Dam Oustees and Affected Persons Association
Comments