Cesc Budge Budge Unit Cost Put At Rs 1,880 Cr

The directors of the newly constituted West Bengal State Electricity Board (WBSEB) have fully endorsed a report of the board's committee to fix the cost of RP Goenka controlled power utility CESC Ltd's 500 mw Budge Budge thermal power project at Rs 1880 crore.

This is Rs 580 crore, or 24 per cent, lower than the revised price of Rs 2,460 crore claimed by the RPG power utility. The company which has just won its long battle over fuel surcharge, now faces another bitter fight with the state government over the Budge Budge project cost.

The endorsed report is being sent to the West Bengal government for calculating the CESC tariff revision. The Budge Budge power cost will be reflected in the CESC tariff for the first time when the next revision takes place.

The cost estimate was placed before the new Board members only after they were asked to swear that all discussions on the Budge Budge cost issue will be kept secret.

The Board secretariat normally circulates the agenda for discussion at the board meetings a few days in advance. However, the agenda for this meeting did not mention that the Budge Budge cost issue will be taken up. The company had submitted its revised cost estimate to the state government for taking it into account while revising the of tariff. The revised cost which is about Rs 800 crore higher than the cost earlier approved by the state government, was referred to a high level committee at the WBSEB.

There are several areas where the committee disagreed with the company's estimates. It has said that the reasons cited for delay in funding and the quantum of interest hike are largely unacceptable.

The committee is also not convinced over the cost increases resulting from changes of scope in the project. There had also been changes in various orders long after they were placed on suppliers.

Too much of redundancy has been planned in the project. The boilers have been re-designed to burn not only coal, but also gas. Two wagon tipplers have been planned in addition to a track hopper. The committee found all these unacceptable.

The report was placed before the last meeting of the earlier board about a month back. The last Board member briefly discussed the report, but decided not to take any decision. It was not that the Board members were in disagreement with the findings of the report. But, they felt that they should not take a decision on such a sensitive issue as they will be relinquishing charge in another few days.

A final decision on the expert committee report became urgent in view of the pending tariff revision. The new Board which had its first meeting on Friday, therefore took up the report.

However, the great secrecy that now surrounds the report and the subsequent endorsement to the state government for its acceptance, only shows that the state government is being extremely cautious in handling the issue.

It remains to be seen if the state government fully accepts the expert committee. Whatever the decision, the decision will affect all the 1.5 million consumers of CESC. The extent of tariff increase will depend on the cost of the Budge Budge project accepted by the government.