After making profits for the last two years, the West Bengal State Electricity Distribution Co. (WBSEDC) is now faced with a scenario where its entire profit is likely to be wiped out in view of the rising coal cost. For this, the WBSEDC is blaming the Ministry of Coal for its dual pricing of coal to the power sector. To offset the impact of the rising cost of coal, the price of electricity would be hiked. According to estimates done by the WBEDC, the average unit cost of electricity will go up from the present rate of Rs3.35 to Rs4.05, a quantum jump of 70 paise per unit.
The Minister of Coal, Sriprakash Jaiswal during his recent visit to the state had assured that the government was not considering of raising coal price. The WBSEDC sources point out that true to his words, the Centre did not hike the notified price of coal, but it took a circuitous way of doing that. First, it opted for restricted supply of coal at notified price to the power generating agencies, then asking them to purchase additional coal by entering into auction process. Thus, the power generating agencies are forced to buy coal at 40 to 50% higher price. The notified price of coal at which Coal India supplies coal to the power generating agencies stands at Rs 2400 per ton, while the new price works out for the coal from abandoned mines is Rs.4800 per ton. "It seems the reform of power sector has been done in parts, the front end has been reformed, but nothing has been done to bring the backward linkage in the supply chain in line," observes Anirban
Guha, Director (Regulatory & Trading) of WBSEDC. Incidentally, West Bengal is one of the six states where the reform of State Electricity Board has taken place in due time and it has been running profitably.
The power generating agencies like CESC, DVC, and state-run WBPDCL have already entered into agreement with Coal India to buy coal at the enhanced rate to meet their full requirements. In addition to that, WBPDCL has decided to import 6,00,000 ton of coal from abroad in the current year. Since the import of coal will also be at a higher price, the total cost input of fuel will go further up. Already, the WBSEDC is feeling the heat because it buys around 400 mw daily in addition to its daily peak time generation of 3800 mw. Because NTPC has also started importing coal from abroad and thereby the cost of purchasing electricity from NTPC has also gone up. In April, 2008 the unit cost of power sold by NTPC to WBSEDC was Rs1.81, but in April 2009 it has jumped up to Rs 3.18.
The present electricity tariff regulatory system has a built-in mechanism to give effect to the additional cost into electricity tariff. Only last year, the tariff was revised upward. According to sources close to WBSEDC, the effect of the enhanced price of tariff should normally be felt by the consumers in 2010-11, but if the present trend continues then the WBSEDC will demand an immediate revision of electricity tariff.