Centre suggests State take-over of debts of power distribution companies


By Kartik Lokhande 
The Union Ministry of Power has floated a proposal to reduce debt burden of power distribution companies as well as reduce losses. Under the plan, the Ministry has suggested take-over of debts of power distribution companies (DISCOMs) by respective States. Through this, the Centre aims at ‘permanent resolution’ of DISCOM issues concerning debt.
During a meeting of State Power Ministers held recently, this proposal was floated and discussed. Under the Ujwal DISCOM Assurance Yojana (UDAY), the Union Ministry of Power has made several suggestions including respective States taking over debts of DISCOMs, enabling quarterly tariff revision, increasing operational efficiency, lowering the cost of power, and laying emphasis on budgetary discipline. The quarterly revision of tariff has been suggested as the Union Ministry thinks that such periodic revision will be ‘easier to implement’ and that it will be ‘absorbed’ by consumers. In this regard, necessary changes in tariff policy are expected soon.
The debt burden of DISCOMs is a talking point as the accumulated losses of power distribution companies across the country are pegged at a whopping Rs 3,66,156 crore in the past six years, that is, from 2009-10 to 2014-15. The States borrow at around 8 per cent rate of interest, and the interest rate on DISCOMs’ debt is an average of 12 per cent, and as high as 14-15 per cent for many distribution companies. However, the trouble is that the regulators do not allow pass-through of interest on past losses in tariff. Hence, it is learnt, the Union Ministry of Power has suggested ‘surgical intervention’ to rationalise outstanding debt.
Considering the DISCOMs’ debt as de facto borrowing of States, Union Ministry of Power has suggested States to take over 75 per cent of debt of respective DISCOMs. As per the proposal, the principal debt taken over will not be included in fiscal deficit of States. However, interest has to be serviced within Fiscal Responsibility and Budget Management (FRBM) limits. According to sources, this is a tricky area. For, it will not be easy for the States to service interest within FRBM limits, given the already existing liabilities.
The debt of DISCOMs will be taken over by States in priority of debt already due, followed by debt with the highest cost. Transfer to DISCOMs by respective States will be as grant with an option to spread the grant over three years. States can grant loan to DISCOMs at the same rate of interest as that of State borrowing, it is suggested. However, given the current situation, how Maharashtra responds to the proposal remains to be seen.

Accumulated losses of power distribution companies
--------------------------------------
Year                   Losses
--------------------------------------
2009-10         Rs 41,558 cr
2010-11         Rs 51,971 cr
2011-12         Rs 76,877 cr
2012-13         Rs 71,690 cr
2013-14         Rs 64,060 cr
2014-15         Rs 60,000 cr
--------------------------------------
Total         Rs 3,66,156 cr
-------------------------------------- 
 
(15-11-15)

Comments

Post a Comment

Popular posts from this blog

Chanda boy Dr Vipin Itankar is UPSC topper in State

Image
12-06-14 * Efficiency and effectiveness are the keywords for the topper * Nagpur lads Aawesh Titarmare, Arpit Gudadhe, and Ankur Meshram also bring laurels to the region in UPSC examination results By Kartik Lokhande  “I am blessed. Vipin is extremely hard-working, dedicated and a confident guy I have ever met in my life. He was always at top since college days. I was confident that he would be in top ten in the UPSC examination as well.” (Centre) Dr Vipin Itankar, who secured 14th rank nationally and topped Maharashtra in UPSC Civil Services Examination-2013 results, celebrating with his family members in Chandigarh on Thursday. This is how Dr Shalini, wife of Dr Vipin Vithoba Itankar, reacted on learning that Vipin had emerged as the Maharashtra topper in Union Public Service Commission (UPSC) examination. Talking to ‘The Hitavada’ over telephone from Chandigarh, where Vipin and Shalini work in Government Medical College and Hospital in Sector 32, both exp...
Read more

Hinganghat: Here rests the great surveyor of India...

Image
  By Kartik Lokhande  Often, the work of explorers lives on but they get buried in the history. This is exactly what has happened in case of Lt Col William Lambton. The man credited with initiating one of the greatest scientific activities in the world -- The Great Trigonometrical Survey of India -- lays buried at a place now known as ‘Kala Gota’ amid a crowded locality behind Bus Stand in the town of Hinganghat in Wardha district. Sadly, the memorial of this great surveyor, whose work led to measuring the highest point on Earth 50 years later, has become a victim of neglect. And, surprisingly, not many know about it and the great significance of Hinganghat in the landmark survey.  Lambton Memorial, known locally as 'Kala Gota' in Hinganghat. (Pic: Kartik Lokhande) Lt Col William Lambton The benchmark stone of Great Trigonometrical Survey, in the courtyard of a house behind Bus Stand in Hinganghat. (Pic by Kartik Lokhande) Lt Col Will...
Read more

Eknath Ranade, the man with ‘Rock’ solid determination

* November 2015 marks the culmination of birth centenary celebrations of Eknath Ranade, a son of Vidarbha who made it the cause of his life to realise the dream of Vivekananda Rock Memorial at Kanyakumari By Kartik Lokhande  It was 1962, a year that had stirred the atmosphere in the country owing to several factors including a war with China. In January 1963, India was to celebrate the birth centenary of Swami Vivekananda. In down south, in Tamil Nadu and Kerala, tension was in the air over Swami Vivekananda’s memorial. There were attempts by some to claim the Rock off the shores of Tamil Nadu where Vivekananda meditated. A firm leadership is required to navigate through little storms in the journey towards realisation of a goal. Eknath Ranade, a man born in village Timtala in Amravati district of Vidarbha region in Maharashtra, was destined to be that firm leader as far as Swami Vivekananda’s memorial at Kanyakumari. Born on November 19, 1914, Eknath Ranade was the ...
Read more