Western Coalfields cuts deal with MPEB on defaults

Public sector Western Coalfields Ltd (WCL) has finally arrived at a settlement with its "chronic defaulter" Madhya Pradesh Electricity Board (MPEB) regarding bill payments.

"The matter has been put to rest an outstanding of Rs 474 crore for five years has been sorted out," disclosed G S Chugh, chairman-cum-managing director of WCL, here on Thursday. Chugh said the company has registered a sales realisation of Rs 4,629 crore in fiscal 2004-05 as against Rs 3,908 crore last fiscal.

"Of this, Rs 449 crore were realised in February alone," he said. He said that WCL had also entered into a fuel supply agreement with MPEB backed by an irrevocable letter of credit.

WCL has been pushing for the fuel supply agreement for the last decade and finally succeeded in getting MPEB to sign on the dotted line. Chugh said that the outstanding amount at Rs 628 crore was still high, but it included the Rs 474 crore that WCL stood to recover from MPEB.

As per the agreement, MPEB would not only clear its current bills, but also pay Rs 7.5 crore per month to WCL towards arrears.

Chugh said the WCL stood to collect Rs 212 crore from MPEB and the rest of the amount had been waived following the settlement. The rest of the outstanding amount included Maharashtra State Electricity Board's (MSEB's) old dues of Rs 60 crore and sundry amounts towards the Punjab State Electricity Board and other state power utilities. MSEB sources 20 million tonne of coal per annum from WCL while MPEB takes 7 million tonne.

Chugh said that WCL ended the year with an all-time high production of 41.41 million tonne. The target for 2004-05 had been revised upwards from 38 million tonne to 41 million tonne, but the company crossed the target by another 4 lakh tonne. Dispatches were also higher at 40.31 million tonne as against 39.2 million tonne achieved last year.