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For the first time in two decades, the Brihanmumbai Electric Supply & Transport (BEST) undertaking faced such a severe cash crunch that it could have potentially plunged the island city into darkness. BEST has been unable to pay the bills of Tata Power for the past three months, which provides most of the city’s electricity requirements.
Tata Power slapped a notice on BEST in October, asking the public utility to clear its dues amounting to Rs 894 crore within a month otherwise it would stop supply of power. However, there is some relief for BEST with the Brihanmumbai Municipal Corporation (BMC) deciding to sanction Rs 1,600 crore in loan to the undertaking.
The tenure of the loan is five years. It will carry a compount interest of 10 per cent. BEST will now be able to clear the liabilities towards Tata Power with the help of this money. “Tata Power, which generally gives about 60 days to clear outstanding payments, had served BEST a notice and said it would be left with no option but to discontinue power supply and sell that power in the open market,” said O P Gupta, general manager, BEST.
“We have not been able to pay Tata Power since July. I was not getting a single loan installment from any bank. If we had not got the loan from BMC, we would have faced a huge problem in the next two months,” Gupta said.
Tata Power supplies 900 MW per day to BEST, whose total requirement to keep the island city — from Colaba to Sion and Mahim — lit up is 950 MW. BEST buys electricity at Rs 5.06 per unit from Tata Power.
“We have always paid before due date and availed ourselves of their prompt payment discount. We have a long and healthy relationship with Tata Power so they have expressed some understanding. We will make the payment as soon as we get the loan,” said a senior BEST official.
Earlier this month, BEST, which has been posting losses for nearly a decade, revised its financial estimate for 2012-13 to a loss of Rs 1.26 crore from the previous estimate of Rs 281 crore. For 2013-14, it has estimated a profit of Rs 511.94 crore in its electric supply division and a loss of Rs 45,590 crore in its transport division, after provisioning for a bus fare hike. The BEST panel of members is yet to approve the budget estimates.
Gupta said disbursing Diwali bonus to its 47,000 employees will be difficult this year due to the tight financial condition. The public utility hasn’t even been able to pay the current month’s salary to its employees yet, he said.
TATAs(the Manufacturer) for City of Mumbai from Colaba to Mahim/Sion. TATAs(the Manufacturer) for City of Mumbai from Colaba to Mahim/Sion. Tatas were silently swallowing the bulk profit and BEST was left to the task of facing the Public Wrath. The agreement between the BEST and TATA Power (the Manufacturer) is completely one-sided and it high time that it should be placed in the Public Domain. Can one believe that the BEST chose Tata Consultants to study its working? And will anybody believe that Tatas were appointed contractors for computerization of the BEST%u2019s Supply wing ?
