Bengal power company pins profit hopes on tariff rise

State-owned West Bengal State Electricity Distribution has, by recognising $1.4m of unrealised revenue as “potentially recoverable”, made a net profit of $40,000 for the first six months of 2011.

However, there is very little chance of the utility being able to recover even a fraction of this unrealised revenue, and without a rise in tariffs, it will eventually post a significant loss for the period, a board member from the company is reported to have said.

Speaking on condition of anonymity, the board member said: “There was a lot of debate in the board on whether or not we should recognise the unrealised revenue as recoverable. Had we not done this, the credit rating of the utility would have immediately been cut.”

The company charges an average tariff of Rs4.27 per kWh, one of the lowest in India, and wants to increase it to Rs5.60 per kWh, in line with current coal prices. However, the regulator has turned down requests to raise tariffs five times this year.

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