Inter-ministerial panel to resolve Gridco-REL payment issues

The Orissa government has constituted an inter-ministerial committee (IMC) to resolve various outstanding issues between the state owned Gridco and Reliance Energy Ltd (REL).

The committee comprises of the ministers of finance, industry and steel and mines, tourism and higher education, rural development, law and energy, official sources said.

The panel would take stock of issues like servicing of NTPC bond, payment of outstanding Gridco loan, payment of outstanding government loan and system upgradation in the power distribution and suggest measures to deal with them.

The state government has also formed a committee of secretaries (CoS) to assist the inter-ministerial committee in resolving these issues. It comprises of secretaries in the departments of finance, industry, law, energy and the chairman-managing director (CMD) of Gridco.

After privatisation of distribution business in the state, four distribution companies namely Wesco, Nesco, Southco and CESU defaulted in payment of bulk supply dues and loan dues to Gridco. Consequently, Gridco also defaulted in payment of dues to National Thermal Power Corporation (NTPC). Subsequently, a minute of discussion was signed between NTPC, Gridco and BSES (now Reliance Energy) and the distribution companies for securitisation of dues payable by distcoms to Gridco and dues payable by Gridco to NTPC in 2000.

As a result, three Reliance held distribution companies issued bonds aggregating Rs 400 crore effective from 1 October 2000 to Gridco and Gridco, on its part, transferred these bonds to NTPC in March 2001.

Meanwhile, the Union government implemented the Onetime Settlement Scheme (OTS) recommended by the Alhuwalia committee, as per which the State Electricity Boards (SEBs) were allowed waiver of 60 percent on delayed payment surcharge (DPS).The respective state governments were required to issue tax free bonds to NTPC covering principal outstanding and 40 percent DPS.

Following the cue, the state government agreed to issue bonds to NTPC in respect of Rs 1102 crore outstanding dues payable by Gridco. It excluded Rs 400 crore bond issued by distcoms and transferred to NTPC earlier.

Since the distcoms defaulted in servicing the bonds, Gridco went for onetime settlement with NTPC and got the bonds transferred in its favour in March 2007. Thereafter, the distribution companies have unilaterally and arbitrarily adjusted the bond dues in their accounts despite objections by Gridco nominated directors in their board.

Gridco has filed petition before the Company Law Board, Eastern Region Bench, Kolkata for default in payment against bonds which stood at Rs 680 crore by March 2009.

On the other hand, the task force on power, constituted in 2006 under the chairmanship of Vivek Pattanayak, had identified seven issues to be resolved between Gridco and REL and accordingly made suggestions in 2007.

It had suggested that the distribution companies should arrange bank loan to service the power bond or NTPC bonds. The Union Bank of India (UBI) should be approached afresh to sanction the loan.

On the issue of payment of outstanding dues towards Bulk Supply Tariff (BST) by the distribution companies, the task force chairman had suggested for re-scheduling and re-phasement of these dues. Though Orissa Electricity Regulatory Commission (OERC) has approved this suggestion, Gridco is yet to agree to it.

Similarly, though OERC has ruled in favour of payment of delayed payment surcharge (DPS), the Reliance held distribution companies are not paying this to Gridco.

Vivek Pattanayak committee also suggested that dues payable to distribution companies by government departments and public sector undertakings (PSUs) of the Orissa government should be adjusted against government loan payable by the distcoms. This remains un-resolved, sources added.