Bengal discom banks on distribution overhaul with World Bank loan to optimise cost of supplies

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October 20, 2020 1:30 AM

The discom's in excess Rs 12,700 crore regulatory assets or previous losses recoverable from customers, can be realised by a tariff hike.

The discom's total debt, including market borrowings, regulatory debt and working capital loans stands at above Rs 18,700 crore.The discom's total debt, including market borrowings, regulatory debt and working capital loans stands at above Rs 18,700 crore.

West Bengal State Electricity Distribution Company (WBSEDCL) is now pinning hope on World Bank’s (WB) $400 million or around Rs 3,000 crore loan to overhaul its entire distribution network, which would help in optimising the cost of supplies to its 1.80 crore consumers, much required for financial sustainability.

The state discom, already ladened with a repayment obligation of Rs 8,750 crore for the current year, including its dues to the state gencos (Rs 5,000 crore), has recently taken a transit loan of Rs 1,022 crore from the Centre to tide over the liquidity crunch arising out of realisations, as low as Rs 350 crore against the regular realisation of Rs 1,500 crore, during the lockdown period.

The discom’s total debt, including market borrowings, regulatory debt and working capital loans stands at above Rs 18,700 crore. But the WB loan was essential to implement the grid modernisation programme as a long-term solution, an official said. The state government has already tied up with the WB loan and its arm, International Bank for Reconstruction and Development (IBRD) to provide $280 million, the official added.

Low paying consumers, making 90% of the total consumer base, contributes only 40% of the retail sales. Such consumers doubled in the last six years leading to aggregate technical and commercial (AT&C) losses to the tune of 27%. Containing technical and commercial losses would be a move towards cost optimisation in power supplies, which in turn would ease liquidity of the discom. But as Suthirtha Bhattacharya, chairman of West Bengal State Electricity Regulatory Commission, said, realisations have to go up, possible, only with an increase in tariff, due since October 2016.

The discom’s in excess Rs 12,700 crore regulatory assets or previous losses recoverable from customers, can be realised by a tariff hike.

West Bengal power minister, Shobhondeb Chattopadhyay, said overhauling the entire distribution network would include increasing the number of low voltage substations on the top of the existing 848 high voltage and low voltage substations, for addressing the problem of low voltage supplies.

West Bengal at present has 705 low voltage substations. Besides, creating an underground distribution network and replacing overhead network with ariel bundled cable would prevent power theft, he said.

The WB’s grid modernisation programme, while decreasing AT&C losses will also rectify the System Average Interruption Duration Index (SAIDI ) and System Average Interruption Frequency Index( SAIFI), which are tools of getting evidence about distribution reliability. The tools create a mechanism for uninterrupted good quality electricity distribution in an ageing distribution network.

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