The lesser known tariff: fuel surcharge levy in Indian States

The implementation of fuel surcharges has been strongly advocated by the Union Government as a measure to alleviate the financial predicament of DISCOMs. In this context, the report studies the various processes, methodologies, and practices across states to determine, levy, and recover fuel surcharges. Fuel surcharges which are typically levied on a monthly basis and revised every quarter enable timely recovery of costs incurred over and above approved tariffs. Therefore, they ease the working capital woes of the DISCOM. This, in turn, also reduces the burden of carrying cost on consumers. As the impact on consumers can be significant, any process for its determination and levy should ensure transparency, accountability, and public participation. Considering this, the report covers developments in Assam, Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, Haryana, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Punjab, Rajasthan, Uttar Pradesh and West Bengal. This report highlights common trends and draws lessons for a national framework for implementation of fuel surcharges. Such a framework can ensure timely recovery of prudent costs for DISCOMs while being acceptable to consumers.