The Telegraph
Tuesday , December 10 , 2013
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Power rate freeze fear for utilities

- First step in Katwa, govt slow on panel

Calcutta, Dec. 9: Bengal is unlikely to witness a tariff hike in the next few months as the state power regulator, which takes a call on electricity rates, is yet to get two of its three decision-making members.

Sources said that with Mamata Banerjee averse to the idea of a hike and the Lok Sabha polls nearing, the government was “dragging its feet” over selecting the successors to Prasad Ranjan Ray, who retired as the regulatory body’s chairman in September, and engineer Pranab Gupta, whose term ended in 2011.

The three-member West Bengal State Electricity Regulatory Commission will remain virtually defunct if the two posts are not filled up and key decisions on tariffs cannot be taken in the absence of a majority.

“Power tariff cannot go up unless the two vacancies are filled up. Voting among the top three is necessary on decisions pertaining to rates. Till now, there is little indication that the posts would be filled up anytime soon,” a power department official said.

The West Bengal State Electricity Distribution Company Limited, which is already reeling from a substantial debt burden, could lose around Rs 100 crore if tariffs are not raised.

Although the government formed a three-member committee of retired high court judge Amit Talukdar, chief secretary Sanjay Mitra and Central Electricity Authority chairman Ravinder to select Gupta and Ray’s successors two months ago, the selection process is yet to take off. The process to select the two decision-making members, which involves giving out advertisements in newspapers, could take three to four months to complete.

The possible freeze means the average tariff for power supplied by the state utility to its 1.1 crore customers is likely to stay at Rs 5.93 a unit, excluding a government subsidy of 25 paise. Those availing of power from private utility CESC in Calcutta and Howrah are also likely to continue paying the current average tariff of Rs 6.17 a unit.

“The chief minister is principally opposed to hikes. She has criticised the Centre for everything from rise in prices of essential commodities to that of diesel and fertilisers. Now that the Lok Sabha polls are approaching, it is clear that the government doesn’t want another hike and so is dragging its feet on the vacancies,” an official said.

Sources in the state-run utilities said an average hike of 8-11 paise a unit was necessary to make up for the 10 per cent rise in fixed costs. Fixed costs include heads like salaries, repayment of debt, interest, maintenance and upgrade.

According to the sources, the debt-ridden generation utilities have had to cut down on their coal procurements by around 40 per cent.

“The utilities are having to pay steeper interest rates because of poor debt servicing and coal supply, which was smooth till 2008-09. The cash crunch is becoming a problem,” a source said, adding that the last thing the power sector needed was a repeat of the 2011 crisis because of a coal shortage.

After coming to power two years ago, Mamata had said she was averse to the idea of increasing power tariff. The state power utilities lost over Rs 2,500 crore in 2011-12. The situation, however, improved in January-February next year, when the chief minister did not object to the power utility’s decision to revise the tariff to offset the rise in coal prices.

Sources in the government said the state-run utilities were likely to miss the December 31 deadline for filing a tariff petition.

A senior official, however, said the possible freeze in tariff could last only till the Lok Sabha elections.

“The chief minister is now aware of the ground realities of the state-run electricity sector and the need for such revisions if the utilities have to stay in the green. She only wants to stall the process for a few months,” a power department official said.