Gujarat imposes ban on power sourcing from other states.

Narendra Modi-led Gujarat government has banned state-based companies from sourcing electricity from other states, a move that will compel them to buy costlier power from government-run utilities.

The decision, ahead of the general elections beginning next month, will affect companies across industries such as Reliance Industries, Nirma, Larsen & Toubro, Hindalco, Apollo Tyres, Sun Pharma, Petronet LNG, Gujarat Florochemicals, United Phosphorus and Alembic.

Companies say their costs will rise by at least Rs. 2.75 a unit of electricity, as they will have to pay close to Rs. 7 for a unit of electricity supplied by state-run utilities, against Rs. 4.25 they were paying earlier.

Gujarat-based industries import close to 1,000-MW power from other states through trade on electricity exchanges, while state-run utilities have almost 2,500-MW of idle generation capacity.

The decision has come as a surprise for the industry as Modi, who is the Bharatiya Janata Party's nominee for prime ministership, has been selling Gujarat's supposedly industry-friendly environment in his poll campaign.

The government has, however, defended its decision, saying it will help the power surplus state save thousands of crore of rupees every year.

ET