Rising fuel cost short-to-medium term constraint, says Sanjiv Goenka

The rapidly rising cost of fuel, owing to the Russia-Ukraine crisis and demand-supply factors, is a short-to medium-term constraint, CESC Chairman Sanjiv Goenka has said.

Goenka said in such a scenario, it is vital that power producers and distributors are able to expeditiously pass on purely the element of higher fuel cost through tariffs.

Unfortunately, while this forms a part of each power supply contract, we still see reluctance of state governments and regulators to give their assent in a timely manner.

This, in turn, negatively affects the financial results of power producers. I hope we will see considerably less of this reluctance in the years to come, he said in CESC's annual report for 2021-22.

The chairman of the Kolkata-based power utility, however, said notwithstanding this limitation, he is optimistic about the future of power generation and distribution in India and better days for CESC.

The company also said it failed to obtain higher tariff demand for 2018-19 and 2019-20 from the West Bengal Electricity Regulatory Commission.

It had demanded an average tariff of Rs 8.32 per unit and Rs 8.51 per unit in 2018-19 and 2019-20, respectively. But, the regulator in an order had allowed an average tariff of Rs 7.31 per unit, including fuel adjustments, officials said.