Andhra Pradesh government has sought a five-year moratorium on payments to central power organisations such as Power Finance Corporation (PFC) and National Thermal Power Corporation (NTPC) to enable it to restructure its state electricity board.
This is the first time a state government has sought a break in payments to central undertakings.
State Chief Minister Chandrababu Naidu has written to Union power minister P R Kumaramangalam seeking this relief for the state electricity board which is embarking on a restructuring programme.
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Andhra Pradesh State Electricity Board (APSEB) owes about Rs 1,200 crore to PFC and NTPC collectively.
Sources said the five-year moratorium would enable the state government to postpone it immediate payments. The book adjustment for APSEB would therefore mean conversion of its revenue expenditure into a five-year deferred liability. The main reason, though, is that the state government will not have to hike tariff when structural adjustments are being carried out in the board.
Under the restructuring programme, the electricity board will be dismantled into three entities, with the state handling transmission. Generation and distribution will be divested to the private sector.
After the revamp, the state government will either bear the SEB's dues or pass it to the company undertaking generation and distribution.
NTPC officials said that though APSEB owed Rs 300 crore (inclusive of a surcharge of Rs 70 crore and a principal of Rs 230 crore) to the corporation, a five-year break would only add to its outstanding.
According to rough estimates, for an annual consumption of 1,000 mw from the corporation, APSEB will have an outstanding of around Rs 5,000 crore at the end of the moratorium period.
PFC has extended funds to APSEB under the operational and financial restructuring programme for SEBs. PFC has a net outstanding of Rs 900 crore from APSEB.
Such a deferment would mean that both the central PSUs would not have cash flow from the state for five years. However, the moratorium will attract interest rates linked to the costs of five-year debt paper in the markets.
The rates for such a moratorium, if accepted, are expected to be around 15.5 per cent, which is the rate at which the Andhra Pradesh State Irrigation Development Corporation recently raised debt paper through private placement of bonds at 15.5 per cent.
The Andhra Pradesh government will publish a white paper on the financial status of state electricity board and seek a debate on it, Chief Minister N Chandra Babu Naidu said, adds PTI.
Only then the issue of increasing power tariff, extent of increase and exemptions in it would be decided, Naidu told reporters at Narendrapuram in east Godavari district yesterday.
Earlier, while addressing a public meeting as part of TDP's "Janachaitanya programme", the Chief Minister said there would be no hike in power tariff for farmers and poor people.
The aim of the government was to ensure uninterrupted power supply for 24 hours to domestic consumers and nine hours to farmers.
He said 1,200 mw power has been added to the state electricity board grid which has achieved 83 per cent plant load factor.
Referring to Srisailam project which was submerged in the recent floods, Naidu asserted that all seven units of the project would be revived by the end of January.