Power Majors To Pass On Rly Tariff Hike

The 12 per cent across-the-board hike announced in railway tariffs will have practically no effect on the profitability of power majors Tata Electric Companies (TEC) and BSES.

The hike will be passed directly on to the consumers as fuel adjustment charge (FAC), said BSES director S S Dua.

Analysts said consumers will end up paying about 8 paise more per unit. Under the Electricity Supply Act, 1948, the tariff paid by consumers has two components.

The first component - the basic tariff - can be hiked only once a year and BSES has raised it with effect from March 1, 1997.

 

The second FAC can be charged to the consumer every time there is a rise in the cost of fuel. Increases in freight costs too are factored into the fuel adjustment charge.

BSES generates 500 mw of electricity at its Dahanu plant in Maharashtra, which involves an annual consumption of two million tonnes of coal. It sources its coal primarily from South Eastern Coalfields (SECF) with which it recently signed a three year fuel linkage agreement.

It also buys coal from the Mahanadi Coalfields in Orissa and resorts to imports.

BSES pays about Rs 1,200 per tonne while buying coal from SECF and an additional Rs 35 per tonne for its purchases from Mahanadi.

Analysts have used Rs 1,200 as the benchmark rate while forecasting the eight paise tariff increase.

The Mumbai-based power major pays Rs 400 as pithead costs and Rs 800 as freight costs.

A 12 per cent hike in transportation costs will push up the cost of coal to Rs 1,296 per tonne.

Two million tonnes of coal generate three billion units of electricity. This pushes up the cost per unit by approximately eight paise, an analyst said.

The freight hike will have little effect on the generation costs of Tata Electric Companies as its power plants use gas, oil and coal or various combinations of these inputs as as fuel.