Bengal discom may seek govt guarantee for bank loans to meet expenses

West Bengal State Electricity Distribution Company (WBSEDCL) is likely to seek bank guarantee from the state to take fresh loans so that it can meet salary expenses for its 18,000-odd workers for May. We have no cash flow to pay salaries to our staff and pension to our pensioners. We will have to take loans from the bank for which we will have to approach the government for bank guarantee,” state power minister Shobhondeb Chattopadhyay said.

The discom’s income has fallen to such an extent that the company is struggling to meet its fixed as well as variable costs. A large part of the fixed cost comprises salaries and pensions, and that is generally met from bills realised.

The discom has been able to realise only Rs 350 crore during the lockdown period, whereas its normal realisation is up to Rs 1,500 crore. If the lockdown continues up to May 17, the shortfall in realisation will surpass Rs 2,000 crore, which will put the discom under great financial pressure.

Since unbundling, the discom has been running with a clean balance sheet. “We have never come under such financial stress,” Chattopadhyay said.

WBSEDCL has 2 crore consumers, of which 5 lakhs are industrial consumers whose payments enable the company to meet a large chunk of expenses. Domestic consumers under the BPL category have to be crossed-subsidised and a large chunk of the realisation from domestic consumers under the general category goes in meeting such expenses. The discom has 512 customer care centres. All these were kept open despite lockdown for collection of bills.

With fall in demand for power, WBSEDCL, which spends around Rs 1,800 crore per month for purchasing power, has been able to cut some costs on this front since April. Chattopadhyay, however, said there would not be much reduction in purchase bills since all long-term power purchase agreements will have to be executed.

The discom has held back its payment to generators like West Bengal Power Developmemt Company and NTPC, and has started drawing less power from them.

WBSEDCL’s spending on salaries and pensions doesn’t exceed Rs 150 crore per month. So, it is not the biggest burden the company has to face. If the company can curb the leakage during purchase from the exchanges, it can avoid getting into a financial stress, official said.

While the company has already started adjusting variable costs, it will take time to adjust fixed costs.