BSES cuts electricity to Kerala over unpaid bills

Vol 5, PW 24 (30 Jan 02) Midstream & Downstream

YOU'RE A PRIVATE power producer and find that your sole client, a state electricity board, has run up huge unpaid bills.

What do you do Either continue supplying power in the hope that the money will come in, or switch off the power supply till your bills are paid. Mumbai-based BSES chose the second option in Kerala, where it has an 80% stake and is the operator in BSES Kerala Power Ltd. State-owned Kerala State Industries Development Corporation holds the balance 20%.

BSES has shut down its 165-MW naphtha-fired power station in Kochi. "We had no choice," reveals a source.

"The state electricity board owed us more than Rs100cr ($20.8m). The money was just not coming in.

So, we shut down the power station in mid-December." Jolted into action by this sharp move, the Kerala State Electricity Board paid up around Rs30cr ($6.3m) in January. But BSES is unwilling to budge until all its bills are paid.

"We have to pay fuel costs in advance. Then we have to pay salaries, pay for spares.

A power station cannot be run on alms." Kerala state officials are now busy organising payment of the balance. "When the full payment is made we will be able to restart the power station.

There is a demand for power in Kerala, but the key issue is payment." BSES Kerala Power Ltd began commercial operation in June 2001.