BEST electricity division incurs loss of Rs 456 cr

Even as the Brihanmumbai Electric Supply & Transport (BEST) undertaking banks on its electric supply division to cross subsidise losses in its transport division,statistics show that the power supply segment plunged into a loss in 2011-12 from a healthy profit the previous year.

Written by Express News Service | Published: August 29, 2012 4:00:04 am

Even as the Brihanmumbai Electric Supply & Transport (BEST) undertaking banks on its electric supply division to cross subsidise losses in its transport division,statistics show that the power supply segment plunged into a loss in 2011-12 from a healthy profit the previous year.

As per an internal report of BEST,the electric supply division posted a loss of Rs 456.03 crore in 2011-12 as compared with a profit of Rs 206.86 crore in 2010-11.

“There was a huge gap in the price at which the BEST was buying electricity and the rate at which it was being sold,resulting in a heavy loss,” said Ashok Patil,BEST chairman.

“Another factor could be because the BEST has accumulated losses of Rs 392 crore in the form of non-payment of bills by different consumers,” he added.

In September 2010,the Maharashtra Electricity Regulatory Commission (MERC) had cut electricity charges for BEST consumers from an average cost of supply of Rs 6.27 per unit to Rs 5.94 per unit. On the contrary,during the same period the cost at which the BEST purchases electricity from Tata Power Company jumped to Rs 5.06 per unit from Rs 3.98 per unit.

The tariff rates as decided by the MERC were applicable till May 2012 and were raised only from June 2012. The average cost of supply now works out to Rs 7.78 per unit. “We hope to recover the losses this year with the increased power tariff rate now,” Patil said.

The BEST’s transport division had posted a loss of Rs 391.73 crore in 2011-12,slightly narrower than the loss of Rs 400.38 crore in 2010-11.

The BEST uses its power supply division to cross subsidise its transport division,which has been in the red for several years now.

The MERC had earlier rejected BEST’s plan of subsidising its transport division by making adjustments in its electric supply division,a decision that was backed by the Appellate Tribunal for Electricity.

The BEST had later challenged this decision in the Supreme Court,which had ruled in its favour last year.

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