Centre To Dock Rs 9200 Crore State Plan Funds

For all future purchase of power, the SEBs will have to either pay in advance or open a letter of credit with a bank. Past dues will be deducted out of the Centre's devolution to states in annual instalments.

"The number of instalments remain to be decided. In the past when such appropriation took place, we did it in four years. The idea is to reduce the burden on state governments," A.Abraham, the power secretary, said.

The Rs 9200 crore dues relate to all state electricity boards except the Delhi Electric Supply Undertaking. Desu owes an additional Rs 6,000 crore. It has been given time till January 1 to shift to the LC mode of payment for current and future purchases while the method of allocating past dues has yet to be worked out.

The Centre tried to test the waters by floating the idea at the recently held meeting of state power ministers which was also attended by certain chief ministers. Although a decision has now been taken, the modalities and time-frame for recovering past dues through central appropriation will be taken in consultation with state governments, sources said.

Nearly half of the Rs 9,200 crore is the value of power purchased by SEBs while the rest is surcharge which is a power sector euphemism for interest on unpaid dues. The beneficiaries of the decision include NTPC, National Hydro Power Corp, Rural Electrification Corp and PFC.

SEBs owe Rs 5,000 crore from NTPC alone, of which Rs 1,500 crore is in the form of surcharge. NTPC's efforts to obtain World Bank funding worth $ 800 million has been affected because of the huge amount of bills receivables.

NTPC has not been paid an amount which is equal to the value of its power production for three months twenty days. This has affected its credit worthiness and in turn its ability to access World Bank finance.