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The Damodar Valley Corporation (DVC) on Friday said it might be “compelled to regulate the supply of power” to Jharkhand State Electricity Board (JSEB).
In a release, DVC said JSEB, which piled up payment arrears of around Rs 3,000 crore, has been defaulting in its monthly payments this year.
DVC said its financials have deteriorated further as JSEB has even failed to pay for the current monthly energy bill, resulting in piling up of dues of about Rs 70 crore each month for the past six months.
It further said that JSEB has been continuously neglecting current payments to DVC despite the Jharkhand Government’s financial support of Rs 80 crore on this account every month.
DVC charged that JSEB has violated the terms of its Power Purchase Agreement (PPA). In terms of the PPA, JSEB is to open letter of credit for 105 per cent of the monthly bills. JSEB, DVC alleged, has not opened the LCs at all for the last six months.
Out of options
DVC said it ran out of options in view of thinning cash flow and a possibility of a closure. DVC is currently managing operations with short-term borrowings. However, it pointed out, in terms of the Union Ministry of Finance guidelines for regulation in short term loan, “DVC will face closure owing to shortage of cash flow”.
Now, the corporation was “finding it difficult to pay the fuel bills and meet other financial obligations”.
JSEB began to accumulate payment dues since 2001. Out of the total JSEB outstanding of Rs 3,000 crore, Rs 1,550 crore is for the principal amount. On the balance Rs 1,450 crore, JSEB has raised certain issues. DVC and JSEB will likely approach the appropriate Regulatory Commission for settlement.
In addition, DVC has claimed a ‘Delay Payment Surcharge’ of Rs 1,700 crore.
DVC is the first multipurpose river valley project of the country, spread over an area of about 24,250 sq km in West Bengal and Jharkhand. It is involved in flood control, irrigation, water supply, generation, transmission and distribution of electricity.
>jayanta.mallick@thehindu.co.in
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