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Home News Power Sector News Bengal - Populist stance faces 'power' hurdle

Bengal - Populist stance faces 'power' hurdle

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Bengal CMSubsidise domestic power supply or raise tariff? West Bengal Chief minister Mamata Banerjee, who's also the state's power minister, is apparently at the crossroads. If she opts for subsidizing power, it will take a toll on the ailing financial condition of the government. And if tariff is raised, it will be a blow to the populist image of the new government. West Bengal State Electricity Distribution Company Ltd (WBSEDCL) is all set to apply for a revision in tariff in its annual tariff petition to the State Electricity Regulatory Commission next month. Only last month, despite strong resistance, WBSEDCL was dissuaded from applying for a revision consequential to the coal price hike.

Will the power minister say no again? Officials in the finance department fervently hope not. For, the earlier proposal on tariff revision already translates to a subsidy cost of Rs 500 crore on the ailing state exchequer. Stalling the latest tariff hike proposal would entail a subsidy burden of another Rs 2,200 crore.

A source in the government shuddered at the government's current dilemma: "The new government has been on the path of populism. It has flatly refused to increase revenue in any quarter. We hope the government takes a practical stance now. If this natural and mandatory tariff revision is stalled, the state will be doomed."

The state utilities have been crippled by the enhanced coal price that they can't pass onto consumers. Officials said if they were to waive the tariff revision, they wouldn't be in a position to generate power and the state would go into an acute power crisis from October.

CESC has already increased variable cost in accordance with a regulation by the West Bengal State Electricity Regulatory Commission (WBSERC) that allowed the power utility additional cost recovery. The regulation was formulated on the back of a coal price hike from April 1.

Thus, while CESC consumers pay a revised tariff of Rs 5.21 a unit, WBSEDCL consumers are still paying the old rate of Rs 4.27 a unit. The concession not only costs the debt-ridden government Rs 500 annually, the burden has had unprecedented financial implications on WBSEDCL and West Bengal Power Development Company Ltd (WBPDCL). Both companies are bleeding -- WBSEDCL, for the first time, has defaulted electricity duty of Rs 70 crore and WBPDCL has defaulted payment of coal cess of Rs 50 crore. Both amounts are payable to the state government.

The state power department is currently busy working on the rate they must propose to WBSERC for the tariff revision. If the revision is not allowed, the utilities will fail to generate or supply power.

The revision is mandatory for another reason. The government is bound by the Fiscal Responsibility and Budget Management (FRBM) Act to generate its own resources by raising revenue. The Act also minimizes the scope for subsidizing deficits like the ones project by the power department.

Source- Times of India


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