The Orissa government has given an ultimatum to the Bombay Suburban Electricity Supply Corporation (BSES) to provide unconditional and legally enforceable bank/ corporate guarantee to Grid Corporation of Orissa (Gridco) to back up the latter's proposed tripartite agreement with National Thermal Power Corporation (NTPC) for clearance of dues.
The decision to issue such an ultimatum was taken at the state cabinet meeting held here yesterday.
The government has given 30 days to BSES to comply with the ultimatum. If the company failed to give corporate guarantee by this deadline, Orissa Electricity Regulatory Commission (OERC) will be approached for "appropriate action" against it, the cabinet resolved.
Orissa proposes to sign tripartite agreement with NTPC and the Reserve Bank of India (RBI) for clearance of arrears and current dues of the central-sector utility company.
However, the state-owned bulk power trader Gridco has been complaining that it was unable to clear the dues of NTPC because of non-payment of bills by distribution companies who purchase bulk power from it. In these circumstances, as a back-to-back arrangement for securitisation of NTPC dues, the government had sought corporate guarantee from BSES.
BSES owns three of the four power distribution companies in the state. They are Northern Electricity Supply Company (Nesco), Southern Electricity Supply Company (Southco) and Western Electricity Supply Company (Wesco) who supply power to consumers buying it from Gridco.
For giving corporate guarantee BSES had set certain conditions. These included implementation of the recommendations of the Sovan Kanungo committee report which had suggested certain corrective measures to make the utilities operating in the state viable and relaxation of escrow arrangement with Gridco for the purpose of giving salaries to the employees of the distribution firms.
However, the state cabinet has rejected the conditions. It also reiterated its stand to sign the tripartite agreement with or without the corporate guarantee from BSES. The agreement will be signed within a couple of days, said chief secretary D P Bagchi.
He said, the whole issue will be reviewed by the cabinet after 45 days. On BSES condition for granting escrow relaxation to the distribution companies, Bagchi said, this has to be decided by Gridco as the escrow agreement is between the seller and the buyer.
The chief secretary said, BSES will be asked to discharge its obligation in terms of the shareholders agreement by arranging working capital for the three distribution firms.
The cabinet further decided that the amount of power to be purchased by Gridco will be approved by the government. Bagchi said, collection drive will be launched by distribution companies on a continuous basis to maximise their revenue earnings. It was also decided to activate "bijli adalats " for early disposal of consumer complains.
