In the face of reluctance by the BSES to provide corporate guarantee on behalf of its three distribution companies in Orissa for availing a Rs 1200 crore loan for the state's power sector, the state government has hardened its stance against the utility major.
The cabinet sub-committee on power of the Orissa government has decided to review the shareholders' agreement of the three BSES-managed distribution firms and also the power purchase agreement signed by them with Grid Corporation of Orissa (Gridco).
Senior advocate of the Supreme Court and Gridco counsel Ramchandran has been asked to conduct the review. He has been requested to submit a report giving legal opinion as to what action could be initiated against BSES companies within a week.
BSES owns 51 per cent shares in the three distribution firms, Nesco, Wesco and Southco with the rest 49 per cent still with the government.
Meanwhile, the cabinet sub-committee has directed Gridco to file a petition in the Orissa Electricity Regulatory Commission (OERC) seeking a direction to the three BSES owned firms to comply with the conditions for availing Rs 1200 crore loan from Power finance Corporation (PFC) to help Gridco pay the NTPC dues.
Besides, Gridco has also been asked to reconcile its dues pending against the BSES companies by July 15 and the disputes, if any, will be resolved by the regulatory commission.
The sub-committee also recommended the government to set up a high level committee to review the income and expenditure gap in the distribution firms.
The state energy department is particularly irked with BSES for its reluctance to give corporate guarantee to enable the government give state guarantee for availing the PFC loans.
While seeking state guarantee for release of the sanctioned loans, PFC had stipulated that in case the distribution companies failed to pay in tune with their business plans, the promoters of these companies, BSES, AES and the state government, should have to stand guarantee for making the payments.
But with no sign of any corporate guarantee from BSES, the state finance department has questioned how could Orissa government will be the sole guarantor for the PFC loan when it holds only 49 per cent stake in the distribution companies.
In a recent sub-committee meeting, two of the members of the panel, industry minister KV Singhdeo and finance minister Panchanan Kanungo accused BSES of repeatedly defying Orissa government's direction and sought legal action against the company for non-compliance of government orders.
Stating that Gridco is unable to pay the dues of power generators like NTPC due to lack of cash flow from and inefficiency of distribution firms, the ministers pointed out that the three BSES companies are not even submitting their revised business plans to the regulatory commission despite repeated reminders.
The BSES is also accused of not bringing in any capital for improvement in the system and managerial efficiency of the distcos.
