As the recently decided debt restructuring scheme for state-owned power distribution companies (discoms) is not applicable for Odisha, which was the first state to privatise the distributiion business in 1996, the state is mulling a proposal to write to the Centre on inclusion of its power trader Gridco Ltd in the scheme.
“Gridco was created by unbundling of the state electricity board and was in charge of power distribution before this business was privatised. Gridco is now suffering losses due to flaws of discoms under private management. Even though we do not control discoms, we have a right to be included in the scheme,” said a senior official of the state energy department.
Gridco’s role has been limited to a power trader since the privatisation of its distribution business. At present, three discoms-Wesco, Nesco, and Southco·are controlled by Reliance Infra. The fourth and the biggest discom, Cesu is being managed by Odisha Electricity Regulatory Commission (OERC) after its earlier owners, the US based AES abandoned the firm in 2001 citing losses. Gridco has minority stake in all four discoms.
The debt restructuring scheme, which was cleared by the Cabinet Committee on Economic Affairs (CCEA) on Monday, has provisions that half of the outstanding short-term liabilities as of March 31, 2012 would be taken over by the states governments. They will be converted into bonds backed by state government guarantee. The rest of the short-term liabilities will be rescheduled by the lenders and be serviced by the discoms with a three-year moratorium on principal.
As of now, Gridco has about Rs 4,000 crore outstanding loans, the officer said.
The losses incurred by the company are primarily due to defaults made by discoms, which are unable to generate revenue due to problems such as lower tariff, inefficiency in bill collection and electricity thefts, etc.
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Due to mounting loan burden on its balance sheet, lenders have now refused to assist the power trader. Gridco is currently in the process of floating bonds to generate money for its annual expenses. “The money that would be generated through bonds are peanuts compared to our high debts. We need financial backing from the government,” demanded the Gridco official.
The power trader expects to earn profit in years to come by selling power that it would get from various private producers. As of now, 29 private developers have shown interested to set up thermal plants in the state, with a projected generation capacity of more than 35,000 MW.
According to the agreements made by the companies with the state government, they are bound to sell 12 to 14 per cent of their generated power to Gridco at a fixed price. Besides, the state government has asked all private power players to give an undertaking mentioning their commitment to provide certain portion of power to the state free of cost, in line with the National Tariff Policy for hydro power.