The group of ministers (GoM) on power has failed to agree on the recapitalisation of Power Trading Corporation to Rs 3,000 crore today.
The differences between the power and finance ministry on the need to raise the paid-up capital to such a level to allow PTC to trade in 10,000 mw of power annually prevented any progress on the issue. The Cabinet note moved by the power ministry for approval by the GoM had asked for raising the authorised capital of PTC to Rs 5,000 crore and the paid-up capital to Rs 3,000 crore over the next 5 years.
The power ministry argued that the additional capital infusion was needed to provide comfort to the independent power producers on PTC's ability to pay for the power it will buy from them. It had also asked for raising funds through the issue of government-backed debentures.
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But the finance ministry has said the government should not provide an additional Rs 1,000 crore to PTC as part of the recap plan. The power ministry had suggested that part of the additional capital can be provided by the Centre and the balance Rs 2000 from the shareholders of PTC including National Thermal Power Corporation, PowerGrid besides a public issue.
The finance ministry has said that given the precarious condition of the power sector, it would not be prudent to allow the corporation to take on such a large exposure as there was a strong possibility of default.
PTC has also suggested that it can raise funds through the public issue also, but the finance ministry has argued that in the current depressed market conditions it will basically devolve on the financial institutions. Instead, the finance ministry has pointed to the weak financial condition of the state electricity boards. PTC was conceived as a company that would trade in power by buying it from private generating companies and sell it to SEBs.
Today's meeting was attended by power minister Suresh Prabhu, deputy chairman of planning commission KC Pant, and law minister Arun Jaitley while finance minister Yashwant Sinha and disinvestment minister Arun Shourie were absent.
Sources said some of the members expressed an apprehension that default by any of the SEBs to PTC could result in another Dabhol-like situation. While the Centre is entitled to deduct 15 per cent from the annual plans of each state to recover power dues, they said political implications might cloud the issue. Instead it would be better to speed up the reforms of the electricity boards.
In today's meeting it has been decided that the power ministry will work on an alternative plan along with the planning commission to resolve the vexing issue.