Mumbai: The cash strapped state-owned power companies will raise debt worth Rs 20,000 crore to meet monthly expenses, ease liquidity pressure and spend on ongoing infrastructure works. The state government has decided to provide guarantee for the same and it will not charge the guarantee fee.
The proposed loan will be raised by the state-owned MSEB Holding Company, the MahaGenco, the MahaVitaran and the MahaTransco from NTPC, Power Finance Corporation, Rural Electrification Corporation or banks and financial institutions. The government on Friday has issued a notification on the establishment of a five-member committee headed by the Chief Secretary to decide terms and conditions for raising the debt.
State Energy Department in the notification has said during the lockdown, following the drastic fall in the economic activities the daily demand for power has reduced to 16,000 mw from 23,000 mw. However, the MahaGenco, the MahaVitaran and the MahaTransco have to struggle to maintain adequate, clean and quality power supply and continue concessions granted to the industrial and commercial consumers by the Maharashtra Electricity Regulatory Commission. These companies will face huge financial stress in the wake of revenue mismatch and fulfilment of commitments to various consumers.
Recently, the Minister of Energy Dr Nitin Raut had said the MahaVitaran, which is into power distribution, is facing an unprecedented cash crunch and it has been difficult to clear the payments of power generators since April 2020. This was because the realisation of revenue halted in April and May after industrial and commercial consumption was stopped during the lockdown period.
Dr Raut further said even though the MahaVitaran’s revenue dropped substantially the power purchase costs, staff salaries, tax liability were not reduced. As a result, the MahaVitaran with a consumer base of more than 2.51 crore has been facing an unprecedented cash crunch.
As reported by Free Press Journal, Dr Raut had urged the Union Minister of State for Power RK Singh to provide financial assistance by giving a grant of Rs 10,000 crore to the MahaVitaran to tide over the liquidity crunch caused by Covid 19 crisis.