Politics unplugs DVC’s plan to sell plant to NLC

Politics appears to be short-circuiting generation utility Damodar Valley Corporation hopes of resolving its finances.

Burdened with a huge idle capacity, a legacy of unthinking addition programmes, DVC firmed up a plan to hive off a 1,200 MW coal-fired project to the 26:74 joint venture with State-owned NLC.

The ₹5,500-crore deal along with improvement in operational performance could have cut down DVC’s losses from ₹1,100 crore in 2015-16 to ₹250 crore in 2016-17, primarily through a reduction in interest payment by ₹900 crore.

The proposal was cleared by the DVC board, including representatives of West Bengal, one of the three stakeholders in the generation company, in February 2016. By May, approvals had come in from the other two stakeholders, the Centre and Jharkhand, also..

But, thereafter, the mood seems to have changed in Kolkata.

First, the Trinamool Union in DVC saw an opportunity to hold the deal at ransom to press its demand for the promotion of some Group C and D employees. The union is headed by State Power Minister Sovandeb Chattopadhyay.

The Centre was not agreeable to such demands. But the State would not budge, either.

With losses rising as new capacities were coming on stream without power purchase agreements, the DVC management was straining to convince both sides on the importance of the NLC deal. The papers reportedly reached Chief Minister Mamata Banerjee by November. To DVC’s misfortune, the timing could not have been worse. For, just then the Narendra Modi government decided to demonetise ₹500/1,000 notes, a move to which Banerjee was bitterly opposed. The Trinamool Union could not have been happier. “The issue rests with Didi (Mamata Banerjee),” Pradip Banerjee, general secretary of the Trinamool Union in DVC, told BusinessLine in early January.

Power Minister Chattopadhyay, too, echoed the union. “The workers’ demands must be met to get the deal cleared,” he said in January adding that DVC chairman Andrew WK Langstieh had agreed to his proposal.

Chattopadhyay’s expectations were proved correct. The DVC board (read, the Centre) was finally convinced about the cost implications of the standoff with Bengal. The workers’ demands were approved at the February 27 board meeting, but on the condition that it would be a quid pro quo to Bengal approving to the NLC deal.

Yet, the deal remains uncleared.

Chattopadhyay now tells BusinessLine that he wouldn’t push for the approval. “Why did they make it conditional? What if the Chief Minister clears the JV proposal and DVC doesn’t live up to its promises?”

Sources say Chattopadhyay is afraid to take DVC’s plea to the Chief Minister. For, if Didi doesn’t relent, Chattopadhyay will lose face to workers.

How DVC will resolve this problem is not clear. But the generator is in a spot, with losses mounting every day. With Mamata Banerjee unwilling to play ball,the company is headed to book losses of over ₹1,000 crore this fiscal, four times the initial estimates.

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