The State-controlled power utilities in West Bengal have failed to submit tariff petition for recovering nearly Rs 1,800 crore current cost and part of nearly Rs 5,000-6,000 crore of “regulatory assets” (cost push recognised by the regulator but not allowed to be recovered) by the extended August 16 deadline.

While the utilities have urged the regulator for further extension of timeline, it is not known as yet if the prayer is granted. The private sector operators in the State, led by CESC Ltd – a licensee distributor for Kolkata and Howrah – have already submitted petitions for tariff hike to recover the rising costs.

To compound the problem, the State government, which is politically sensitive to any tariff hike proposal, is yet to announce plans to directly subsidise the State-controlled utilities. Considering the fund crisis of the government, it would also not be easy to offer subsidised electricity as in Karnataka and Andhra Pradesh.

Available information suggest that having been restrained from recovering rising costs, the State utilities are incurring cash losses to the tune of nearly Rs 90-100 crore a month for a few months and are currently meeting the shortfall through retention of coal-cess and electricity duties and short-term borrowings from banks.

The utilities collect duties and cess, amounting to nearly Rs 1,000 crore a year, on behalf of the State government.

If the financial health of the utilities is not restored, the state may also lose on interest income to the tune of Rs 400 crore against nearly Rs 6,200 crore loans extended to such utilities in the past.

A bigger problem, however, will emerge once the Planning Commission, armed with the V.K. Shunglu Committee report, will recommend financial prudence in such utilities. The Shunglu Committee is expected to submit its report by the end of September.

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