BEST set to lose power?

Aug 29, 2012, 07:29 IST | Shashank Rao

In a blow to the Undertaking, Maharashtra Electricity Regulatory Commission authorises Tata Power to start electricity distribution in island city; a case is pending in Supreme Court

Things aren’t getting any better for BEST. The Undertaking, which has suffered losses to the tune of Rs 456 crore in 2011-12 from its supply division, stands at the threshold of losing its monopoly over power distribution in the Colaba-Mahim-Sion region. Maharashtra Electricity Regulatory Commission (MERC) has ordered Tata Power, which currently has an agreement of supplying 1000 MW to BEST, to extend its distribution to the island city as well.

This will create more options for the 10 lakh consumers of BEST. However, it would certainly be a body blow for the government agency. Tata Power had around 2.5 lakh consumers till March 2012.

It certainly has been a poor year for BEST. In 2010-11, the Undertaking’s supply division was in the green by Rs 206.86 crore. “MERC had prevented us from hiking power tariffs and so we are now facing losses even in the supply division,” said Ashok Patil, chairman, BEST.

In for a shock
Apart from this, the agency is also facing bad debts of Rs 392. Industry insiders say that presently the Undertaking distributes to end consumers after purchasing electricity from Tata Power. However, if citizens get power directly from Tata, the situation could worsen dramatically for BEST.
Sources in BEST are putting up a brave front. “We have approached the Supreme Court on the matter of allowing Tata Power to supply in our area. Unless a decision is out nothing much can be done,” said a senior official.

Analysts claim that Tata Power may raise rates if it enters the island city. “Tata Power will invest heavily in laying cables and other infrastructure. It can recover at least 16 per cent of this cost from consumers. This might lead to a hike in total tariff charged from all customers,” said a power industry expert.

Rs 847.76 cr
Total losses suffered by BEST in 2011-12

Charged up
Meanwhile, a Tata Power spokesperson said, “MERC has allowed changeover in Mumbai for a particular set of consumers, which is key to creating competition in the larger interest of users. However, we understand that a few categories are being kept out of the changeover which is against the competitive spirit though we can always acquire them as a part of our licence.”

BEST’s transport division has been facing losses over the last two years. In 2010-11, the deficit was Rs 400.38 crore, which marginally went down to Rs 391.73 crore in 2011-12. The transport arm of the Undertaking has for long been cross-subsidised by the supply division.

Current rates BEST
>> 101-300 units: Rs 3.30 per unit
>> 301-500 units: Rs 5.30 per unit
>> > 501 units: Rs 6.80 per unit

Tata Power
>> 101-300 units: Rs 2.50 per unit
>> 301-500 units: Rs 4.40 per unit
>> > 501 units: Rs 5.30 per unit 

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