MP provides cushion to power distribution cos

To mitigate losses of power distribution companies, the state government has decided to come up with a financial restricting plan, albeit, companies have no concrete plan to improve their systems except for raising power tariff each year.

Accordingly, the companies will be allowed to convert fixed-term loans into perpetual loans at comparatively lower rates. The perpetual loans will reach Rs 8916 crore.

The three distribution companies, namely, Madhya Pradesh Poorv Kshetra Vidyut Vitaran Company Limited (East Discom), Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Limited (West Discom) and Madhya Pradesh Madhya Kshetra Vidyut Vitaran Company Limited (Central Discom) pay 11.75 per cent and 12.55 per cent (west discom) interest rates on working capital. “This will come down to at par with that of base rate of State Bank of India,” said a government official.

Similarly, the monthly dues and cess of the companies (discoms)payable to state government have been converted into perpetual loans, to provide a cushion to these companies. “This way the discoms will be able make their balance sheets marketable,” the official said.

On the other hand, the discoms submitted before state regulatory commission that they have to pay zero interest on working capital. The aggregate revenue requirement admitted by the discoms before state electricity regulatory commission stood at Rs 3526 crore (East), Rs 4902 crore (west) and Rs 3723 crore (Central) for the financial year 2011-12.

The new tariff order will ensure a revenue of Rs 3610 crore for east discom, Rs 5024 crore for west discom and Rs 3809 crore for central discom, thereby, the uncovered gap of revenue will be minuscule at Rs 0.57 crore, Rs (-) 1.16 crore and Rs 0.93 crore respectively.

The discom companies not only have proper balance sheet but also have losses from 30-33 per cent which are projected to come down to 24-26 per cent by 2012-13, when the state chief minister is expecting at least eight hours of power supply to agriculture consumers.