Cost rises, CESC weighs tariff hike

CESC consumers may have to shell out more for electricity as the power producer plans to raise tariffs because of a hike in coal prices.

By Our Special Correspondent in Calcutta
  • Published 9.02.18

Calcutta: CESC consumers may have to shell out more for electricity as the power producer plans to raise tariffs because of a hike in coal prices.

Though the exact amount of the increase per unit has not been finalised, the company said there has been a "cost push" because of the price hike and it would be passed on to consumers, subject to the approval of the West Bengal Electricity Regulatory Commission (WBERC).

Coal India raised prices for certain grades from January 9, which may translate into a rise in retail tariff of 11 paise per unit, according to an estimate previously made by credit rating agency Icra.

"There will be a cost push but it would not negatively impact the company," CESC chairman Sanjiv Goenka said on Thursday without commenting on whether retail consumers would bear the additional burden.

Since 2011, the WBERC allows power companies such as private generator CESC or public utility West Bengal State Electricity Distribution Co Ltd to pass through the incremental cost of fuel to the retail consumer through a mechanism called MVCA (monthly variable cost adjustment).

The extent of the hike, however, depends on various factors such as efficiency in production and transmission and distribution.

According to a section of power producers, Coal India's price hike would effectively translate into an increase of 35 paise per unit.

CESC is likely to restrict the impact on consumers to a large extent and the tariff hike may be around 20 paise per unit. Given that the majority of the CESC consumers consume 200 units or less in a billing cycle, the monthly pinch could be around Rs 40.

CESC has reported a 1.3 per cent rise in standalone profit after tax at Rs 154 crore in the third quarter, while revenue from operation grew 5.3 per cent to Rs 1,706 crore.

Goenka said hypermart Spencer's made its first operational profit on a quarterly basis at Rs 7 crore (profit before depreciation and tax) and hoped that it would make profit before tax in the next quarter.

It has opened seven stores and six more would be added by the end of this fiscal, taking the net addition for 2017-18 to 1.27 lakh square feet.

Restaurant move

RP-SG Group's foray into the quick service restaurants will be spearheaded by Waffle Wallah and Chef's Bowl, the brainchild of Goenka's daughter Avarna Jain.

Waffle Wallah has six outlets in Calcutta and Delhi. Next year, more than 100 outlets will be opened in Delhi, Calcutta, Mumbai and Jaipur.

Chef's Bowl has two outlets (Delhi and Calcutta), while 10 more will come up next fiscal. The rapid expansion of these two formats will follow the closure of all-day breakfast joint Au Bon Pain, which the group had brought to India through a master franchise agreement with the Boston-based company a decade back.