The Telegraph
Monday , June 2 , 2014
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Revenue challenge for power firm

The “empowerment” of rural areas and the noble bid by Bihar State Power Holding Company (BSPHC) to make sufficient power available across the state has brought with it a new challenge — generating revenue to make it a sustainable effort.

The challenge becomes more pronounced because rural areas, which get power at a lower cost, would get a large portion of the available electricity, putting additional revenue burden on BSPHC. The power consumption pattern of urban and rural areas of the state in the past few years drives home the point. (See chart)

While consumption of power is expected to touch 1,600MW in rural areas in 2014-15, in urban areas the corresponding figure would stand at 1,200 MW. Four years ago, rural areas consumed just 500MW of power whereas the consumption in urban areas stood at 922MW.

The average power tariff for rural areas is Rs 2.65 per unit and that in urban areas is Rs 5.40 per unit. Taking this into count, the financial burden of BSPHC, which incurs an input cost of Rs 6.50 per unit for supplying a unit of power, is bound to increase.

Responding to the challenge, BSPHC chairman Sandeep Poundrik said: “We are seized with the future challenge and steps are being taken to enhance the revenue generation. One such step pertains to feeder regulation, which aims to encourage people to pay their bills.”

The feeder regulation would be rolled out in six districts — Saran, Siwan, Purnea, Katihar, Gaya and Jehanabad — from this month. Power supply to a feeder would be in accordance with the revenue generated from the areas receiving power from it. But for the district headquarters, this scheme would be implemented in the mentioned districts and would cover 250 feeders.

In rural areas, feeders generating above 40 per cent of the input cost of power would be provided 14 hours of power. In urban areas, feeders generating above 60 per cent of the input cost would get round-the-clock power supply.

“The scheme entails giving incentive to those customers willing to pay and discourage the tendency of not paying the bill despite getting power,” Poundrik said.

Based on the results, the scheme successfully implemented in Maharashtra could be rolled out in other districts.

The power company has also laid emphasis on several other steps like metering of all the consumers, opening multiple channels of bill payment and conducting regular raids to punish those indulging in power theft.

But these steps have not turned out to be enough as far as huge gap between the cost and revenue generation.

“The company would require at least five years to bring its financial condition at breakeven-level. Hence, we would need the government support. We have demanded additional Rs 1,800 crore from the state government in the current fiscal,” Poundrik said.

The state government appears to be willing to provide the financial support. “We have accepted the demand of the power company in principle and details of the financial support are being worked out,” energy minister Bijendra Yadav said.