High drama was witnessed in the two power companies of the Nagpur city after MSEDCL served a termination notice to its franchisee SNDL for non-payment of over 100 crore arrears. MSEDCL had made all preparations to take over the franchisee area from zero hours of February 9 but an eleventh hour commitment by SNDL to pay up averted the move. MSEDCL officials, however, said that the take over had merely been deferred subject to SNDL fulfilling its commitment to clear dues.
SNDL's refusal to take MSEDCL's warnings seriously led to the crisis. MSEDCL had issued a notice on December 15 to SNDL when its arrears reached 83 crore against the 74 crore bank guarantee. The franchisee was given time till January 31 to fully clear the dues. But SNDL did not pay its bills fully even in January.
Consequently, the arrears reached 101 crore by January 31. SNDL was then issued a second notice on the same day and asked to clear the entire amount by February 7. The franchisee again ignored the discom's notice.
SNDL was issued a 15 crore bill for the first week of February, which took the arrears amount to 116 crore. When SNDL showed no sign of paying up, MSEDCL issued a termination notice in the afternoon. The notice asked SNDL to hand over the franchisee area at zero hours of February 9.
MSEDCL had fully geared up for the takeover on Monday. It filed caveats in Bombay High Court and its Nagpur bench to prevent an ex-parte judicial relief to SNDL. The local senior officials summoned all the field staffers from the district and assigned them the areas to be managed after the takeover. Even the appointment letters were ready.
These activities woke up the officials of Essel Utilities, the parent company of SNDL, from their deep slumber and they rushed to MSEDCL's head office in Mumbai in the evening to prevent the take over. The meeting continued for hours and finally a solution was reached by 8.30 pm. Essel agreed to pay a part of the dues on February 9 and rest within a week. They submitted a schedule for payment. The company also agreed to increase the bank guarantee.
A source in MSEDCL said on the condition of anonymity that the reason for non-payment of dues was failure of SNDL to recover bills from consumers. "SNDL has a 90% escrow account with MSEDCL. This means that 90% of the bill amount collected by SNDL is deposited in MSEDCL's account. However, the franchisee has not been able to make large number of consumers pay their bills. These consumers are apparently convinced that SNDL has installed fast meters and therefore refuse to pay the bills," he said.
This is not the first time that Essel has waited for MSEDCL to give it the stick before sorting out the mess. SNDL had not taken any steps to end a strike by its employees until MSEDCL stepped in Civil Lines division.
December 15 | MSEDCL issues show cause notice to SNDL when arrears reached 83 crore against a bank guarantee of 74 crore. Deadline for clearing the dues is January 15
January 15 | On SNDL's request, deadline for payment of dues postponed to January 31
January 31 | SNDL fails to pay up and arrears increase to 101 crore instead
February 1 | SNDL issued another notice asking it to clear the dues by February 7
February 8, morning | MSEDCL issues the power purchase bill for first week of February of 15 crore
February 8, afternoon | MSEDCL issues termination notice to SNDL asking it to hand over franchisee area by zero hours of February 9
February 8, evening | Essel officials rush to MSEDCL's head office and seek to prevent take over. They agree to clear the dues within a week. MSEDCL defers take over