Tax shock to populist Bengal

Calcutta, Sept. 6: Bengal finance minister Amit Mitra’s plan to mobilise Rs 1,041 crore from electricity duties and taxes this year appears in danger of tripping.

The three state-owned power companies have not been passing on taxes collected from customers to the government because the cash-strapped entities are using the levies collected to meet basic expenses following chief minister Mamata Banerjee’s insistence not to hike tariffs.

Power industry officials said they could not recall any instance in recent memory when such levies had been held back in such a manner. Mitra’s estimate of tax collections — which is mentioned in the financial statement he presented to the Assembly last month — from the power sector is 46.43 per cent more than the sum that had been budgeted for 2010-11 by his predecessor, the CPM’s Asim Dasgupta.

“In the absence of a tariff hike, we have not been able to give the duties to the government because we are meeting our daily expenditure from that money,” said Rajesh Pandey, chairperson of the West Bengal State Electricity Distribution Company (WBSEDCL), one of the three companies.

The other two companies are the West Bengal Power Development Corporation (WBPDCL) and the West Bengal State Electricity Transmission Company (WBSETCL).

None of the utilities has submitted its annual petitions yet for tariff revision to the state electricity regulatory commission (SERC), which determines the charges based on input costs, even after three extensions of the deadline. “This is a matter the government is seized of and I don’t want to jump the gun at this moment,” Pandey said when asked whether the WBSEDCL would seek further extensions.

If the government remains firm on its decision not to allow a tariff hike, the companies would require a subsidy of Rs 1,100 crore — Rs 59 crore more than the Rs 1,041 crore Mitra expects as taxes from power sales.

WBSEDCL is struggling to cope, its expenditure-income gap touching 30 per cent. “It (the cash crunch) can only be stretched up to a point. Power purchase costs account for 70 per cent of our revenues. Let’s see if things can change in the next few months,” Pandey said.

The situation at the WBPDCL, which produces enough power, is worse: it does not have enough money buy coal needed for generation at its plants.

Power charges in Bengal have not been revised for two years now, with last year’s tariff-hike proposal set aside by a power tribunal on grounds of technical error.

The SERC had set August 16 as the last deadline for submission of tariff-revision proposals. If the revised tariff for 2011-12 is announced in January — it usually takes three to four months to work out the final rates— consumers will have to pay hefty dues in their bills for April to March 2012. At present, the average power tariff of CESC stands at Rs 5.17 a unit and that of WBSEDCL at Rs 4.27 a unit.