IT has certainly been a costly oversight of the bosses who run the Calcutta Electric Supply Corporation (CESC). But for mismanagement, this once cash-rich R.P. Goenka corporation would never have landed in the hole it finds itself in. A state government-appointed one-man committee has discovered that CESC overcharged its nearly 15,00,000 consumers over Rs 120 crore, by levying excess fuel surcharge on monthly bills.
CESC has been asked to repay its consumers. Last month, after he had been approached by CESC authorities for help, chief minister Jyoti Basu announced that the state government would "take a decision soon" on how to compensate consumers. Till then, the company is making no move to provide any relief.
Sanjeev Goenka of the R.P. Goenka group was not available for comment. But corporate spokesman Mani Shankar Mukherjee told Outlook that the committee may well revise its earlier findings. "We are waiting for the matter to settle and hear from the chairman of the committee, Deb Kumar Bose." Observers, pointing to the time that has already elapsed since Basu spoke on the matter, say it would not be surprising if the government caved in to RPG pressure.
The RPG's case for levying the fuel surcharge was simple. The state government had asked the company to merge 86 paise as fuel surcharge into the basic tariff, on August 17, 1993. CESC claims this could not be done in the case of the low tension categories of consumers who paid only 33.2 paise per unit. For this and other reasons, the company accumulated a shortfall in revenue of Rs 128 crore between 1993 and 1996 which remained unbilled. Incidentally, CESC itself had urged the government to appoint a committee to probe the fuel surcharge question.
For consumers, it was the beginning of a nightmare as CESC started collecting its pending fuel surcharge in monthly electricity bills. The increase started with small levies. But soon the billed amount doubled, even trebled. Says Charubrata Ray, a south Calcutta consumer whose bills have nearly trebled over a period of four months: "It proves that our suspicions, that we were being cheated, were well-founded, and we went wrong in that we underestimated the extent of the corporate loot."
As a last resort, the RPG group sought the chief minister's help. It would obviously like to avoid repaying consumers, but it can't figure out a legal way to get out of the tangle. The RPG group came to acquire controlling authority within the CESC in 1986, with its share holding at around 26 per cent. The support of three financial institutions was crucial in winning for it the controlling authority, which was opposed by the West Bengal representative on the company board, Sankar Sen. He is now minister for power and has never forgotten that "the CESC is after all only a licensee of the state government empowered to take care of electricity generation and distribution".
Before RPG entered the picture, CESC generated about 350 megawatts which, some 11 years later, has risen only to 450 MW a day. The peak puja demand for greater Calcutta this year was around 1,120 MW, and exceeds 950-1,000 MW on ordinary days. The CESC usually gets the balance supply from the West Bengal State Electricity Board (WBSEB) and the Damodar Valley Corporation (DVC). Consumers feel they were doubly penalised since the WBSEB and DVC had already raised tariff. They point out that it was not logical for CESC to raise fuel surcharge on power taken from these agencies since it had incurred no generation cost.
Sources in RPG told Outlook that the company was guilty of a more serious offence. It collected an electricity duty component,but never turned over the accruing sum to the state government whose licensee it is. "This violates all existing norms and rules. Its dues on this account alone exceeds Rs 110 crore," said a department official.
The committee report notes that, "while the WBSEB and DVC sent in their replies in good time (in response to its questions on fuel surcharge), information from CESC started reaching from April 29, 1997.... It can be appreciated that when the average fuel surcharge rate reached 86 paise, there would be different rates for different categories of consumers.... The point to note is that the CESC has realised more than 86 paise per unit in fuel cost bills partly under tariff and partly under fuel surcharge for all the three years (1993 to 1996).... The final accounts for 1993-94 showed that the CESC could earn a clear profit of Rs 40.32 crore against the reasonable return of Rs 18.15 crore."
No newspaper with Left leanings has carried a single complaint on the arbitrary surcharge but local industrialists have openly vented their ire. The Steel Rerolling Mills Association has filed a public interest petition against the CESC. Point out sources at Bharat Chamber of Commerce: "If power rates go up like this, West Bengal is finished. No industry will come here. We want our money back. We've also written to Basu."
Even in the setting up of its new 500 MW power station at Budge Budge, the CESC tried to raise the project costs from Rs 1,800 crore to over Rs 2,200 crore. Says a power ministry official: "According to the CESC's calculations, a unit of power produced at Budge Budge would cost around Rs 8. Can anyone afford such rates? We have asked the CESC to explain the basis for the overall cost escalation."
The state government is in a quandary. Just how far can it go against its licensee? Will it find it more convenient to ditch 15,00,000 consumers? It is indeed a difficult decision given the CESC's clout with Basu and other bigwigs on Alimuddin Street, the state CPI(M) headquarters.
