West Bengal is likely to sever power shortage from next week as cash-starved State utilities have nearly exhausted all avenues to meet peak demand.

While the ensuing winter may offset the impact to some extent, sources are anticipating the worst-ever shortfall next summer. In order to meet the Rs 250-crore monthly revenue shortfall — arising out of prolonged resistance on the part of the Mamata Banerjee Government to tariff revision proposals — the utilities have borrowed the maximum possible Rs 2,500 crore short-term loan and are being denied fresh funding by banks. The borrowings by the utilities during the same period last year were approximately Rs 400 crore.

While comments were not available from the State Power Ministry, sources said that borrowings were stepped up in the last one month, as the State Government ordered the utilities to meet the generation shortfall (owing of supply regulation by Coal India Ltd against mounting dues) by open market purchase of electricity. Estimates suggest that the State paid an additional Rs 150 crore to buy power through this mechanism.

Sources suggest that the distribution utility is set to default payments against purchases from the generation utility from November. The generation utility has already run up an outstanding of Rs 600 crore to Coal India and is staring at regulation of coal supplies beginning next week.

Once regarded as a power surplus State and a model for electricity sector reforms in the country, West Bengal's troubles began with the sharp rise in fuel cost early this year. Besides dues, the utilities were in need of recovering an additional Rs 1.33 a unit from the consumer. This is more than the present average tariff of Rs 4.27 a unit. As politics stuck to its pro-poor stance, the utilities went on buying time from the State regulator for submitting the tariff petition. The last such extension for filing tariff petition will terminate on October 31.

Consumers to suffer

“Considering the huge Rs 3,100-crore outstanding, even the proposed increase will fall short of cash requirement. Moreover, since the cash crunch has impacted plant maintenance, consumers can expect shortfall in generation even after paying the revised tariff,” a source said.

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