Tariff Ceilings Pare Cesc Dues Recovery

CESC, in 1996-97, was unable to recover Rs 84.26 crore from its consumers due to inadequate tariff rates, the report submitted by the state-appointed chartered accountant firm, S R Batliboi & Company, stated.

The company was entitled to a reasonable return of Rs 126.97 crore under the Electricity Act. However, it was able to earn a clear profit of Rs 42.7 crore only.

The RPG power utility will not be allowed to claim recovery of the entire sum as the transmission and distribution loss for the year far exceeded the ceiling of 14 per cent fixed by the West Bengal government. The loss touched an all-time high of almost 20 per cent.

 

On a rough estimate, the company's claim of recovery will be slashed by a maximum of Rs 18 crore leaving a recoverable sum of Rs 66 crore.

Assuming an additional revenue of Rs 4 crore for every one paisa rise in tariff rates, CESC will need a tariff hike by an average 16/17 paise per unit on an average.

The Batliboi report submitted to the government last week vindicates the company's stance that the tariff rates were inadequate. However, CESC has more urgent issues to sort out with the government.

It was allowed a fuel surcharge revision of five paise a unit against its claim of 27 paise a unit. This alone, the company pleaded with the government, is responsible for a cash shortfall of nearly Rs 11 crore a month. Earlier the shortfall was Rs 13 crore.

It is also trying for a revision in tariff which has not been touched since November, 1996. The latest report confirming the revenue shortfall for 1996-97 is will strengthen its hand.

The report came out with a startling revelation - CESC sold less power to its high voltage industrial consumers in 1996-97 compared with the previous year. The sale fell by 1.2 crore units - from 154.13 crore units in 1995-96 to 152.83 crore units in 1996-97.

The low and medium voltage industrial power sale rose from 34.08 crore units to 34.58 crore units, representing a rise by 50 lakh units.

Even with the high, medium and low voltage industrial consumers taken together, sale of power to the industry has suffered a setback in 1996-97.

The fall may be marginal, but reflects the state of the industry in Bengal. In the process, the sale of power to the high voltage industrial consumers has also lost the coveted position of the single largest revenue earning category among various types of CESC consumers in 1996-97.

The domestic low and medium voltage consumers now occupy the top slot with a sale of 154.5 crore units, which was a sharp hike from 146.74 crore units the previous year. In fact, sale of energy for all other categories of consumers increased.

The falling industrial energy consumption further restricts the scope for cross-subsidisation between various types of consumers.

The principle of robbing Paul to pay Peter can be applicable as long as Paul is rich enough to be robbed.