How BMC saved 10 lakh homes from blackout

Published: 07 November, 2012 08:23 IST | Shashank Rao |

BEST consumers were in danger of having their supply stopped by Tata Power over Rs 900 cr; the crisis seems to be over as BMC has decided to loan Rs 1,650 crore to its sister organisation

Current state of affairs at the cash-strapped Brihanmumbai Electricity Supply and Transport (BEST) undertaking is fairly discouraging. While the organisation battles on to stay afloat, the huge debts it has acquired in the past few years are fast pulling it under.

In fact, the situation seemed to have reached a snapping point a few days ago, with the threat of blackout looming large over 10 lakh island city power consumers catered to by the undertaking. The reason: BEST has failed to settle up a considerable sum with Tata Power that supplies electricity to the undertaking, which then distributes it to consumers.

According to data available with MiD DAY, BEST has to repay nearly Rs 900 crore to the Tatas as per the power purchase agreement (PPA) signed for 1,000 MW. The undertaking must tender around Rs 500 crore as early as possible to avoid disconnection of supply from Tata.

“As per the clause of the PPA if we don’t make the payment within 60 days then electricity supply may be severed. We have also received a notice from Tata Power,” said OP Gupta, general manager, BEST. The undertaking hasn’t managed to secure any short-term loans from banks since July, and so it finally approached BMC for financial assistance of Rs 1,600 crore.

Sources in BEST said that the repayment to Tata is pending since July 2012. This is not where the burden of loans ends for the undertaking, which has been regularly facing losses for nearly a decade now. Presently the deficit is of around Rs 2,700 crore for which various long and short-term loans have been taken. “The administration has repaid around Rs 900 crore of these loan amounts,” said Kedar Hombalkar, BEST member from MNS.

The undertaking hadn’t even been able to pay monthly salaries to employees when reports last came in. Sources said the remuneration is usually handed over to workers by the 2nd or 3rd of every month. Many employees are reportedly discontented, as the management hasn’t specified whether it would be providing a Diwali bonus.

Gupta added that if BEST has to break even, then strong steps are needed. “We cannot continue functioning by taking loans over and over again,” he said.

On November 5, Brihanmumbai Municipal Corporation (BMC) cleared a loan of Rs 1,600 crore, which will be given to BEST at an interest rate of 10 per cent. “BEST being a sister organisation, the civic body should have given the credit interest free,” said Ravi Raja, BEST committee member from Congress.

Even as the undertaking is struggling to repay its loans, members representing different political parties including Shiv Sena, Congress, BJP, NCP and MNS, are busy with their blame game and mudslinging. While the Congress-NCP coalition reproached the Sena-run civic body for charging 10 per cent interest, the SS-BJP members – who head the BEST committee – slammed the state government for the situation.

Since 2007-08 to September 2012, BEST has obtained several loans from various banks at different interest rates, which comes to a grand sum of about Rs 9,250 crore. Meanwhile, BEST has estimated a profit of Rs 511.94 crore in its electric supply division and a loss of Rs 455.90 crore in its transport division, with an overall surplus of Rs 56.04 crore for 2013-14. 


What Tata Power says
“We have a long-standing relationship with BEST and acknowledge the financial difficulties they have been facing. We look forward to an early settlement so that our pressures also get reduced.” 

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