The feud between the two Mumbai-based power majors, BSES and Tata Electric Companies (TEC), is hotting up with the former planning to slash tariff by 12 per cent for large high-tension (HT) consumers. BSES plans to charge 50 paise less from HT consumers whose maximum consumption exceeds 750 kw. It is planning to levy Rs 3.60 per unit against the current Rs 4.10 per unit, stated a senior BSES executive. The move is applicable to industrial and commercial consumers.
The move is an attempt by BSES to prevent large consumers such as Larsen & Toubro from switching over to TEC. The company has about 35 industrial consumers.
Its other HT clients includes Otis and the tractor division of Mahindra & Mahindra. The commercial consumers of BSES include Airports Authority of India, Leela Kempinski, Palmgrove and Centaur.
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TEC is essentially a bulk supplier to textile mills, refineries and the Bhabha Atomic Research Centre. It holds the licence for distributing power to entire Mumbai, while BSES and BEST are sub-licencees.
53 per cent of BSES consumers come from the residential sector. Industrial consumers comprise 26 per cent, while commercial consumers comprise another 18 per cent.
A few months ago TEC decided to supply directly to bulk consumers, in certain areas of Mumbai like Bandra-Kurla which were traditionally considered as BSES territory. Besides, TEC decided to charge only Rs 2.70 per unit. BSES has retaliated now by slashing its tariff.
The BSES executive conceded that there was nothing wrong in TEC supplying power in these areas "as there was nothing in the original agreement which prevented them from doing so".
He also pointed out that BSES has to cross subsidise its residential consumers on whom it levies an average tariff of Rs 2.30 per unit. "Every year we add about 70,000 residential consumers leading to an increase in the subsidy burden.
At this rate we will have difficulty in cross subsidising for long. TEC on the other hand does not face any such problem as it does not supply to residential consumers," he added.
About 6 to 7 per cent of BSES total turnover of about Rs 2,000 crore is accounted by industrial consumers. In 1997-98 industrial consumers contributed about Rs 100 to Rs 110 crore to the total turnover.
The proposed tariff cut is expected to have only a marginal impact on the company's profitability.
"The reduction in tariff will lead to a fall in revenue of only about six to seven crore in 1998-99. Next year, the reduction in revenue will be to the tune of Rs 12 to 13 crore," according to analysts.