Private power producer CESC is caught between a need to increase generation tariff and safeguard the new government’s interest. Soon after a new government is formed a power price hike impacting 20 lakh consumers following a R5 per litre petrol price increase would bring about political pressures on the new government, with Trinamool Congress (TMC) now being in power at the both the state and the centre.
TC supremo Mamata Banerjee is learnt to have pushed the Prime Minsiter to review coal tariffs since that has been the root cause for CESC to ask for a higher tariff.
Saugata Roy, senior TC leader and Union minister of state for urban development, told FE though the increase has been asked by a private sector power utility and tariff to be increased by an independent regulator, masses would hold the new government responsible for the hike.
“We will have to see what can be done after we form the government in the state,” Roy said.
CESC vice-chairman Sanjiv Goenka said his power utility has already applied for a 50 paise per unit increase to the regulator and that was much needed to offset the annual impact of R400 crore on the company arising out of the coal price increase. ” We will give SERC ( state electricity regulatory commisison) its own time to review our petition and wait to know that how far it concedes our demand,” Goenka said.
CESC distributes power over a command area of 567 sq km spread across Kolkata, Howrah and Hooghly and Banerjee, who has always been on the populist lines, finds it queer that power tariffs would go up soon after she forms the government.
Though the power sector is not under the purview of the 30% price increase of C and below grades of coal, the 150% price increase made effective for A and B grades of coal have been for all sectors. CESC is one among the very few power producers using 22% of A and B grades of coal. Since CESC is linked with ECL coal it has been historically using a significant quantum of A and B grades, Goenka said. But officials said since the plants are old those require very good quality of coal to run properly unlike NTPC, which can run with coal of D grade and below.
But these issues are not explain-able to the common masses so something has to be done to check an immediate increase in CESC power prices, TC insiders said.
A source close to Banerjee said that the TC supremo immediately after learning about the development called up Pranab Mukherjee, who advised her to consult the Prime Minister.
The Prime Minister was supposed to take a call on the coal price increase on May 16 through a high-powered meeting but that has been rescheduled to May 19. But according to coal ministry sources the PMO has already gone through the fine prints of the executed price increase formula. There has also been communications between the PMO and the coal ministry on the issue of making some alterations in the formula. The PMO has suggested that instead of a segmented increase, the increase could be spread across the board. The present amount of increase impacting only 32% of the total consumers works up to an average 12% increase if it is spread across the board.