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Home News Power Sector News State-specific package for SEB loss instead of one-size-fits-all approach

State-specific package for SEB loss instead of one-size-fits-all approach

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A proposed plan to restructure the dues of ailing state electricity boards (SEBs) envisages state-specific packages, a sharp departure from the one-size-fits-all approach of the previous plan. The finance ministry is working on such a scheme, which will also help banks whose claims on SEBs stand at a massive Rs 3 lakh crore.

According to officials, the restructuring programmes will be linked to specific policy changes adopted by the states to raise tariff as well as reduce pilferage and transmission and distribution losses.

The restructuring package will include measures such as swapping high-cost loans, with interest rates of 10-14 per cent, for loans at lower rates spread over longer periods of time.

Some electricity boards may also be given a moratorium in return of promises to stick to a timetable for reforms.

Officials said escrow accounts of the receivables were also being mulled, particularly for bad cases of default.

The accumulated losses of state distribution companies (discoms) have risen to a massive Rs 2.1 lakh crore as they have failed to recover from bailouts.

Officials said the last one in 2012 failed with most SEBs, including Andhra Pradesh, UP, Telangana and Rajasthan, unable to improve their financial health.

An RBI report has pointed out that banks have already restructured debt worth Rs 53,000 crore of distribution utilities, but there was still no end to their plight.

The report said the state governments might not be able to repay these loans as it will increase their deficit; the restructured loans, too, had a very high chance of turning into bad debt.

The financial troubles of the electricity boards have made states reluctant to sign power purchase agreements with new producers.

The worst performer has been north India, where the electricity boards and discoms have loans of about Rs 1,57,634 crore and accumulated losses at Rs 1,43,715 crore.

The Rajasthan electricity board has accumulated losses of more than Rs 60,000 crore as of March 2014, while Uttar Pradesh faced a staggering loss of Rs 81,000 crore.

The short-term debt of the Rajasthan SEB stood at Rs 50,000 crore.

Officials said no state electricity board had been able to come up with a plan for 100 per cent metering.

Transmission and distribution losses of SEBs in India accounted for 23 per cent of the total power in the system compared with 6 per cent in China and 4 per cent for most of the developed countries.

Even Bangladesh, which receives electricity from the Indian grid, has a far lower transmission and distribution loss rate of 12 per cent.

Source- Telegraph

 

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