Jharkhand’s electricity board had to clear most of its dues to Damodar Valley Corporation (DVC) before it got its loans restructured under the UDAY scheme, but has since accumulated fresh dues to the utility, putting a question mark on the scheme’s ability to salvage the debt-ridden entity. DVC has already started regulating supplies to the state electricity board
DVC chairman and MD Andrew WK Langstieh said the SEB had, prior to UDAY, owed about R7,000 crore to DVC, a joint venture of the central, West Bengal and Jharkhand governments.
In order to sign up for the UDAY scheme, the SEB had paid the utility Rs 4,770 crore in September 2015, but has since piled up fresh dues of Rs 600 crore.
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Jammu and Kashmir was the only state other than Jharkhand that had to clear dues (Rs 2,140 crore) to central power utilities before climbing aboard the UDAY bandwagon. So far, 10 states, including those with heavily indebted discoms like Uttar Pradesh, Haryana and Rajasthan, have signed the UDAY MoUs, under which the states, helped by a relaxation of the fiscal road map compliance by the Centre, were to issue bonds to clear half of their respective discom’s debt in 2015-16 and an additional 25% in the current fiscal. To help other states — notably Tamil Nadu — that could not join the scheme due to regulatory issues, the Cabinet last month extended the deadline for joining the debt recast scheme to end-March, 2017.
The Jharkhand SEB was unbundled into four different companies as part of the UDAY preparedness in September last year. However, Jharkhand Bijli Vitaran Nigam, now the nodal agency to buy power from DVC, has piled up Rs 600 crore dues in 10 months of operation, a DVC official said on condition of anonymity.
Although Jharkhand chief secretary Raj Bala Verma is supposed to hold discussions with the DVC CMD on resuming regular supplies, DVC has already taken a stand that power would be supplied only against payments made.
Langstieh said that Jharkhand was making part payment of its bill every month but according to a DVC official even that mode of payment has already started hitting the cash flow of the company. Jharkhand accounts for more than 20% of DVC’s total revenue from power sales and if the latter had continued unregulated supplies, the mismatch between the net sales figure and the actual realisation would have grown.
DVC has already offered to sell a 74% stake in the 2×600 MW Raghunathpur thermal power project to Neyveli Lignite because of its balance sheet problems. While Langstieh says that the value of the stake would be determined by the Central Electricity Authority factoring in the tariff realised, another top official felt that DVC might have to sell the stake at a loss.
The Raghunathpur plant had cost DVC Rs 8,000 crore at a 72:28 debt equity ratio. But with no power purchase agreement and inadequate return on investment, it is becoming a burden for the firm to carry on with the fixed costs.
DVC last year approached the Reserve Bank of India for a Rs 30,000-crore debt restructuring since its debt servicing capacity had come under severe pressure with low returns on investment. Out of its 6,300 MW total capacity, 1,500 MW is lying idle.
