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Home News Power Sector News Bescom slipping into a debt trap

Bescom slipping into a debt trap

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BESCOMRising dues from government agencies and local bodies, and debt threaten to throw the power utility Bangalore Electricity Supply Company (Bescom) into a financial quagmire. A whopping Rs. 6,521.21 crore is pending as dues from unsettled bills by local bodies towards streetlights and water supply installations, not to mention debt.

Despite the utility reporting an annual turnover of Rs. 14,000 crore, it is managing its operations through income from private consumers, which adds up to around Rs. 800 crore per month. "We have around Rs. 500 crore in reserve for a crisis period. The income from private consumers is sufficient to run our operations, but not enough to upgrade or invest in fresh infrastructure," a senior official said.

"The problem with several gram panchayats and other such bodies is that their grants are not enough to cover the cost of electricity. Newer areas are added and electricity consumed increases, but grants to these bodies do not increase proportionately. This has led to a situation where they are not able to settle bills," a senior Bescom official said.

Local bodies owe around Rs. 2,250 crore. Of this, dues of the cash-strapped Bruhat Bangalore Mahanagara Palike alone are around Rs. 250 crore.

Officials are also not hopeful of an early resolution to this issue.

Apart from this, other Escoms owe Rs. 1,690.80 crore to Bescom.

The only way out for the troubled utility would be infusion of funds by the government, or recovery of dues. With no progress on either front, the future seems bleak for Bescom.

The arrival of Open Access — purchase of power from independent power producers — brought on the downward trend for the company. Open Access has made it financially viable for industries to take power from other sources where rates are lower.

This has led to Bescom being forced to take a fresh look at the demand for power in the coming years. If performance in the past few years is anything to go by, the future does not look too bright for the troubled distribution utility unless it takes immediate steps to lure disgruntled customers.

"A lot of industries have gone out of the Bescom network because of Open Access, which is not a question of service quality but of financial incentives. The Karnataka Electricity Regulatory Commission (KERC) has one of the most lucrative Open Access policies, which allows banking (supply of excess power to Bescom and drawing of power during other months) for an entire financial year. This allows power generators to use Bescom as a cushion," said a senior official.

Managing Director Pankaj Kumar Pandey said that in order to stem the exit of High Tension (HT) consumers, Bescom is considering making its tariff plans more attractive. "We have proposed providing power to HT consumers at a lower rate. The proposal has been submitted to KERC," he said.

Source- The Hindu


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