Maha govt plans to retire high cost debt of Rs 54,000 cr of three power companies

Intiates talks with LIC, NABARD, SBI Caps and others; also explores option to offload equity of these companies to bring in expertise

The Maharashtra government is exploring the option of retiring the high-cost debt of Rs 54,000 crore of its three unbundled power firms by raising loans at lower interest rate. The government has held talks with Life Insurance Corporation of India (LIC), National Bank for Agriculture and Rural Development and SBI Caps to raise loans at 9-10 per cent. The three companies - the Maharashtra State Electricity Distribution Company (MahaVitaran), Maharashtra State Power Generation Company (MahaGenco), and the Maharashtra State Electricity Transmission Company (MahaTransco) —had taken loans at 11-13 per cent following the unbundling of the erstwhile Maharashtra State Electricity Board in 2005.

A government official told Business Standard: “MahaVitaran has a debt of Rs 16,000 crore, MahaGenco’s debt is Rs 22,000 crore and MahaTransco’s debt is Rs 9,000 crore. The debt was raised to finance the infrastructure development of the three power companies. The annual interest payment by the three companies is Rs 5,000 crore. The high cost debt and the interest payment have impacted the capital expenditure. The government hopes that by raising loan at low rates, these companies will be able to get relief.”

The government is also planning to raise Rs 5,000 crore at lower interest rate for the working capital of MahaVitaran with a consumer base of 22.5 million.

Further, the government has roped in rating agency CARE to fix the ratings of the three power companies. Simultaneously, the government will complete the financial restructuring plan of MahaVitaran, MahaGenco and MahaTransco, which will further establish their strengths and weaknesses, the official said.

“The objective is to offload equity after the credit rating is done. The government desires to offload its equity in the MahaGenco with an installed thermal capacity of 7,400 Mw plus.

The equity may be offered to the Navratna company NTPC to use the latter's expertise to improve efficiency and plant load factor of the MahaGenco-run power plants in the state,” the official added.

MAHA PLAN

* Debt was raised for infrastructure development at 11-13% interest rate

* Expects to get fresh loan to retire high cost debt at interest rate of 9-10%

* CARE will soon complete rating of MahaGenco, MahaVitaran and MahaTransco

* Expects to rope in NTPC like Navratna Companies for equity offload