Fund constraints of discoms hits capex programme

Inadequate counterpart funding from three distribution companies (discoms) - North-Eastern Electricity Supply Company of Odisha (Nesco), Southern Electricity Supply Company of Odisha (Southco) and Western Electricity Supply Company of Odisha (Wesco) has hit implementation of the Rs 2,400-crore ambitious capital expenditure (Capex) programme in Odisha.

Nesco, Wesco and Southco controlled by Reliance Energy have managed to arrange counterpart funding of around Rs 80 crore against requirement of Rs 120 crore for Capex implementation in the first phase that was to be completed by March 2013.

Electricity distribution business has been privatized in the state and Capex programme was introduced to rein in high AT&C (aggregate technical & commercial) losses standing at 39 per cent. Capex programme aimed at pruning AT&C loss by 12 per cent by the end of 2013-14. One per cent AT&C loss means a contribution of Rs 60 crore to the state exchequer.

“Implementation of Capex programme has been slowed as Nesco, Southco and Wesco have not been able to generate the necessary counterpart funding. These discoms have been asked to arrange the funds at the earliest. An expenditure estimate of Rs 900 crore has been made for the first phase of Capex which is to be commissioned by March 2013,” a senior energy department official told Business Standard.

The other discom- Central Electricity Supply Utility of Odisha Ltd (Cesu), currently managed by power regulator- Odisha Electricity Regulatory Commission (OERC), has contributed its share of counterpart funding of Rs 78 crore for the first phase.

Of the total outlay of Rs 2,400 crore under Capex, Rs 1,200 crore was to be raised by the discoms. The residual Rs 1,200 crore assistance was to be provided by the state government which included a grant component of Rs 500 crore from the 13th Finance Commission. The Commission was to offer this assistance in four equal tranches of Rs 125 crore each. An outlay of Rs 205 crore was earmarked by the state government for the scheme in 2010-11 and Rs 215 crore in 2011-12 while Rs 291 crore was set aside for 2012-13.