International BusinessPower tariffs hiked by 22% in Bengal
Rising coal prices cited as reason.
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Citing steep rise in coal prices, the West Bengal State Electricity Distribution Company Ltd (WBSEDCL), the largest electricity distribution company in the state, has decided to hike its power tariff by 22 per cent. CESC Ltd, the other power distributor in the state, has also increased its tariff by 12 per cent. This is the second time this year that the tariffs have been hiked.
After the latest hike, WBSEDCL will charge its 7 million consumers Rs 4.27 per unit while the CESC will charge its 2.3 million consumers Rs 4.57 per unit of electricity consumed. This unprecedented hike will take effect from this month itself.
WBSEDCL Director (Regulatory & Trading) Anirban Guha has justified this hike, saying the company sources power primarily from thermal power stations. Therefore, the sharp rise in coal prices has affected the cost of generation adversely. He said ECL, one of the Coal India subsidiaries, had almost doubled the prices for superior grade coal. The prices of Grade A coal had gone up 92 per cent from the earlier price of Rs 2,574 per tonne, Grade B by 99.5 per cent and Grade C by 104 per cent.
For the first time, in a major departure from the administrative pricing mechanism, the Union Ministry of Coal is forcing all thermal power generating companies to purchase about 40 per cent of their total coal requirement through the MoU route. “By introducing this MoU route for purchasing coal, the Centre has taken away the natural advantage of coal producing states like West Bengal, Orissa and Jharkhand. This is nothing but a back door re-entry of the freight equalization policy,” Guha added.
According to WBSEDCL, even with this hike in tariff, the company is likely to post a loss between Rs 300 and Rs 500 crore in 2009-10. In 2008-09, the company had made a profit of Rs 60 crore.
Guha estimated that the latest hike in tariff would generate an additional revenue of Rs 430 crore in the remaining months of 2009-10, but that won’t be enough to mop up the rising bill on account of coal purchase. The additional revenue for CESC will be Rs 116 crore.