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Home News Power Sector News Franchisee policy becomes burden- Aurangabad franchisee defaults 400 crores

Franchisee policy becomes burden- Aurangabad franchisee defaults 400 crores

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GTL UrjaIn a major jolt to MSEDCL's franchisee policy, Aurangabad power franchisee GTL Urja has defaulted on 394 crore following which the distributor is taking over the power distribution network of city. Unless MSEDCL is able to recover the amount it will be the consumers of the state who will have to bear the burden by way of higher power tariff.

MSEDCL managing director Ajoy Mehta, however, said that his company will have to go to court only for 100 crore, which is the disputed amount. "We have 150 crore bank guarantee (BG). GTL has done infrastructure works for us worth 100 crore, whose bills we have not paid. In addition, consumers of Aurangabad stopped paying bills as soon as they learnt that GTL Urja is quitting. This amount is about 100 crore and we will recover it. The remaining amount is disputed and it will have to be recovered through litigation," he told TOI.

GTL is the second franchisee to default after Nagpur franchisee Spanco. Its dues had crossed 200 crore and in this case Essel Utilities had taken over instead of MSEDCL itself. Essel had cleared the dues of MSEDCL and is operating the franchisee from September 2012.

RB Goenka, consumer representative of Maharashtra Electricity Regulatory Commission (MERC), said that the consumers should not be burdened by a single paise and the money should be recovered from the concerned MSEDCL officers.

"Why were the arrears allowed to reach such high levels? The day the arrears equaled the BG amount the contract should have been terminated and BG should have been encashed. It is surprising as to why no escrow account was opened as was the case in Nagpur. This would have ensured that the arrears would not have increased beyond a certain limit," he asked.

A senior MSEDCL officer, on the condition of anonymity, said that MSEDCL's policy of giving franchisee contracts to small companies was responsible for the mess. "Among the five companies that have handled franchisee contracts, two small companies - Spanco and GTL - have defaulted while Torrent Power, Crompton Greaves and Essel Utilities are paying their bills. Crompton has a small dispute of 10 crore," he told TOI.

This is not the first time that the delay in terminating the contract of bulk consumers has cost MSEDCL and consequently the consumers a huge amount. The arrears of Mula Pravara Electrical Cooperative Society (MPECS) touched Rs 2,500 crore before MSEDCL took over its area. Significantly, MPECS was run by the political influential Vikhe-Patil family. The state government was so much in support of MPECS that when Nagpur bench of Bombay high court asked the erstwhile MSEB to disconnect Mula Pravara, the government told the HC that it would create uncontrollable law and order problem.

MPECS has still not given up its claim to its area and the litigation is on. Another litigation is on between MSEDCL and MPECS to recover the dues from the latter.

Source- TOI


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