Delay by the State level regulator in awarding tariff order against cost push for 2011-12 has hit CESC Ltd hard so far during the fiscal. CESC had requested tariff escalation by nearly one rupee a unit from the existing Rs 5.19 a unit, on an average, to neutralise the cost impact.
The RP-Sanjiv Goenka Group flagship reported approximately 33 per cent fall in net profit to Rs 74 crore during the third quarter of this fiscal ended December 31, as against the corresponding period of the previous year.
Sequentially, the profit is down by 35 per cent from Rs 114 crore during July-September 2011.
Incidentally, the private sector licence operator in the twin cities of Kolkata and Howrah, having nearly 25 lakh consumers in its fold, reported a 27 per cent drop in net profit during the July-September 2011 quarter as against the comparable period in 2010, for the same reason.
Regulator waiting
Though there is no official confirmation, sources suggest that the tariff order was delayed to accommodate State-run power utilities — who have been consistently avoiding submission of tariff petition — in the order.
While the Ms Mamata Banerjee-led State government has yet to allow the State utilities to file tariff petition to recover the higher cost during the year, in a late development the state utilities were allowed to recover fuel surcharge so as to neutralise the coal price rise.
Taking a cue from that decision, cash-strapped State utilities have already hiked average tariff to Rs 5.09, which should be enhanced to nearly Rs 5.29 beginning this month.
Future profit boost
With the regulator due to announce its tariff order (with or without taking State utilities into cognizance) to CESC with retrospective effect (from April 1, 2011), within this fiscal, the private sector operator may witness a late boost in profitability beginning January-March 2012 quarter.
Sources suggest that CESC sells nearly 8,000 million units of electricity annually. A back-of-the envelope calculation suggests that a one rupee unit escalation, if granted by the regulator, may boost the CESC bottomline by Rs 800 crore a year.
The delay on the part of the regulator in announcing new tariffs, however, will come as a rude shock to the 25 lakh consumers in Kolkata region who will be required to pay the arrears alongside a higher tariff, as and when it is awarded.