BEST defaults on Rs. 894-crore payment to Tata Power Co
The Brihanmumbai Electricity Supply and Transport (BEST), which distributes electricity to the island city, has defaulted on the payment of Rs. 894 crore to its supplier, Tata Power Company.mumbai Updated: Nov 07, 2012 03:19 IST
The Brihanmumbai Electricity Supply and Transport (BEST), which distributes electricity to the island city, has defaulted on the payment of Rs. 894 crore to its supplier, Tata Power Company.
Though BEST is an undertaking of the Brihanmumbai Municipal Corporation, it has been struggling with its finances and has not been able to pay for the power it procured in the past four months. However, the Tata Power Company is unlikely to cut supply off because the undertaking has assured it that its dues would be cleared soon.
BEST owes Tata Rs. 894 crore for power bought between July and October this year. The undertaking has just one month to clear its dues and this is the first time the BEST has been unable to pay its bills. Earlier, it would pay Tata well in advance and get an early payment discount. The BEST does not have generation stations of its own and has been buying power from Tata for several decades.
BEST officials were confident they would be able to avert a blackout because they have told Tata about a loan of Rs. 1,600 crore sanctioned by the civic corporation.
The company told HT in a statement on Tuesday that it had a long -standing relationship with BEST and it acknowledged the financial difficulties the undertaking had been facing. “We look forward to an early settlement so that our pressures also get reduced.”
BEST caters to 9.5 lakh electricity consumers in the island city. It buys 900 mega watts daily from Tata at the rate of Rs. 4.5 per unit. But because of bad finances, it could not pay for procurement. Following this, Tata served a notice asking it to clear dues in two months or face a black-out.
When the issue came up at the BEST meeting, the undertaking’s general manager OP Gupta said paying Tata’s dues and the BEST employees’ salary was his top priority. “Tata power has asked us to clear dues in two months they will discontinue the services. But I’m trying to make payments as early as possible”
“The two-month period to clear the dues is already over. We need to make an immediate payment of Rs. 525crore, while the rest can be made by the end of this month or the first week of December,” said BEST official requesting anonymity.
Another official said, “The Tata power firm has been informed that the loans will be cleared as soon as the funds are available. They have decided to give us some time to clear our dues,” added the official.