Chhattisgarh and Madhya Pradhesh are at loggerheads over the division of assets and liabilities, following the bifurcation of the states.
Investors in the erstwhile Madhya Pradesh Electricity Board (MPSEB) are bearing the brunt. A sum of Rs 1,200 crore is outstanding to 20-odd banks and other investors, plus Rs 400 crore worth overdues to investors.
The MPSEB has informed bondholders that "due to acute financial crunch, repayment of principal amount and payment of half yearly interest could not be released on due dates".
In a letter to bondholders, MPSEB alleged that following the bifurcation of the states and the formation of Chhattisgarh Electricity Board, "the government of Chhattisgarh without waiting for the Government of India order, unilaterally took over control and management of our assets".
The state government of Chhattisgarh, however, disagrees as the additional secretary S K Misra said: "All the fixed assets are with Madhya Pradesh, and just 10.5-11 per cent of the assets are with Chhattisgarh."
Thirty per cent of the generating capacity of the undivided Madhya Pradesh was in Chhattisgarh, he added. Considering that all these are old plants, and fully depreciated, the book value of the assets have fallen to 10.5-11 per cent.
MPSEB has pointed out that its revenue stream has reduced by more than Rs 150 crore every month "whereas all the liabilities continued with us". The division of liabilities is yet to be determined by the Government of India, an exercise which has to be completed by November 1, 2002.
The ministry of power passed an order in April 2001, appointing the Central Electricity Authority to access the value of assets and liabilities. However, as the report has not yet been submitted, a provisional distribution of assets and liabilities has not taken place, leaving it to the two states to come to an agreement.
"Fixed assets stay where they are, and so far as liabilities are concerned, it is now up to the Accountant General of Madhya Pradesh, state government and Reserve Bank of India to take a view on this," said Misra.
"The state of Chhattisgarh has decided that so far as the bond holders are concerned, pending the final division of assets and liabilities, it will pick up 20 per cent of the liability," said Chhattisgarh additional secretary S K Misra. This implies that it is willing to pay Rs 80 crore towards meeting the overdues, and Rs 240 crore to match the outstanding liabilities to banks and institutions.
