BEST's profitable electricity supply wing runs into losses
In what could spell trouble for the transport wing of the Brihanmumbai Electricity Supply and Transport (BEST) undertaking, the electricity supply branch of the undertaking has incurred a loss of Rs 456 crore in the financial year 2011-12.mumbai Updated: Aug 29, 2012 01:36 IST
In what could spell trouble for the transport wing of the Brihanmumbai Electricity Supply and Transport (BEST) undertaking, the electricity supply branch of the undertaking has incurred a loss of Rs 456 crore in the financial year 2011-12.
The revenue accounts statement presented before the BEST committee on Tuesday also showed that the total loss incurred by the undertaking is around Rs 847.7 crore, of which Rs 397.76 crore was the loss suffered by the transport wing.
The electricity supply wing, which had so far been a profitable venture for the undertaking, cross-subsidises the loss-making transport wing, which runs all the BEST buses in the city. In 2010-11, the electricity wing made a profit of Rs 206 crore.
This means the power supply wing, which pumps money into the transport wing, may not be able to support it this year.
According to the BEST committee, the main reason for this year's losses is the rate revision enforced by the Maharashtra Electricity Regulatory Commission (MERC) in September 2010.
According to the revision, enforced in 2011, the BEST's selling price per unit was reduced to Rs 5.94 from Rs 6.27 per unit, while the cost of purchase was increased from Rs 3.98 to Rs 5.06 per unit, reducing the profit margin. These rates were applicable till May 2012. In June this year the tariffs were hiked again, to the advantage of the BEST.
"We have suffered such a huge loss because of the MERC. However, since the tariff has now been revised, we will recover the loss by next year," said Ashok Patil, chairman, BEST.
The BEST is now struggling to recover its dues. "Some major players in the market owe more than Rs 50 lakh to the undertaken in the form of pending bills. If this distribution loss is recovered, it would be a relief for the undertaking," said committee member Suhas Samant.
Since 1996, the power supply wing has suffered a distribution loss of Rs 392 crore. These include losses owing to power theft, unrecovered bill amounts and late fees.