The Hindu Business Line : MESCom cuts distribution losses to 13 pc

THE Mangalore Electricity Supply Company Ltd (MESCom) has cut distribution losses to 13 per cent and this year it is likely to earn a large profit. This is a clear indication that power reforms are beginning to generate return.

MESCom's loss is among the lowest in the country and compares favourably with the Reliance-operated distribution network in Mumbai. Mr Bharat Lal Meena, Managing Director of the Karnataka Power Transmission Corporation Ltd and Chairman of MESCom, said, "This will make MESCom among the most profitable circles."

In fact the Karnataka Electricity Regulatory Commission (KERC) had prescribed a loss of 16 per cent for revenue estimates for the current fiscal. This loss was an allowance for tariff fixing in the region. However, early last month, MESCom was bifurcated into Mysore (Chamundeshwari Distribution Company Ltd) and Mangalore.

The integrated distribution circle was given a loss allowance of 20.3 per cent. The hiving of the circles brought down the losses in Mangalore to 16 per cent and pushed up the losses in Mysore to 25 per cent.

Mr Meena said that the loss reduction would translate into higher revenues for MEScom. This was because the reduced losses would imply that at least 70 million units more would be available for sale. This in turn meant that the revenues would be at least Rs 23 crore more than the estimated Rs 841.46 crore for the year.

Accordingly the surpluses after netting for expenditure was likely to be upwards of Rs 20 crore as against the originally estimated Rs 15.6 crore,

Mr Meena said that this was achieved by ensuring that all the sales in the existing Mangalore circle was metered.

MESCom's sales are estimated at around 2,500 million units for the current fiscal. Of this bulk of the sales were metered, he added. Metered sale for tariff purposes is assumed at 1,791 million units for the current fiscal or about 72 per cent of the gross sales.

But, he added, that more meters were being installed in the region, indicating that the actual metered sales were higher than the original estimates. This has further helped improve the revenue realisation in the region. "We hope to completely meter the circle by this year end," Mr Meena said. In fact, this was also one of the few circles where all the agriculture pump sets were also in the process of being metered, he added.

The improved profitability from the circle would now improve the valuation for the circle.

The NTPC Electricity Supply Company Ltd, a subsidiary of the public sector power utility NTPC, had pitched for a majority stake in MESCom early this year.

However, this was stuck over issues relating to valuation. The improved numbers put the State Government in a better position to negotiate better valuation for divestment in the circles.

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