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The bell is ticking for the State-controlled power utilities catering to nearly 85 lakh consumers in Bengal. To maintain the populist image, the new government has restrained the distribution and generation utilities from recovering fuel surcharge, leading to a loss of approximately Rs 100 crore a month.
According to sources, the decision has particularly impacted the distribution utility – West Bengal State Electricity Distribution Supply Company Ltd (WBSEDCL), which was already facing a cash crunch due to piling up of Rs 2,500 crore worth of petitions pertaining to cost push till 2009-10.
The State-level regulator had declared bulk of the petitions as valid (allowing the utility to book paper profit) but did not grant tariff award.
CESC surcharge
The privately run CESC Ltd, catering to 25 lakh consumers in Kolkata, however, began recovering the surcharge with effect from April.
Earlier, the Central regulator had allowed the power generation and distribution companies in the country to apply fuel surcharge in accordance with the movement in coal prices on a monthly basis with effect from 2011-12. The aim was to empower the power sector in recovering the input cost and ensure sound financial health.
Accordingly, in May this year, the State distribution utility decided to collect 38 paise a unit surcharge against an equivalent rise in power purchase cost – especially from central sector – with retrospective effect from April. The cost of power was scheduled to move up by another 30 paise a unit from June with the imposition of equivalent fuel surcharge by the State generation utility – West Bengal Power Development Corporation (WBPDCL).
However, having assumed office on May 20, Ms. Bannerjee's government put an embargo on the recovery of fuel surcharge forcing both WBSEDCL and WBPDCL to absorb cash loss to the tune of Rs 50 crore each.
Weak finance
Meanwhile, the embargo on recovery of surcharge coupled with the piling up of old dues (Rs 2,500 crore) has forced the distribution utility to borrow approximately Rs 900 crore loan this fiscal to meet the current expenses. The company is likely to approach the market for raising another Rs 400 crore shortly.
The situation of generation utility is no better. Apart from having over Rs 500 crore payable on coal purchases, the financial crisis has impacted the modernisation projects launched last year.
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