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Imagine an annual business of about Rs 6,600 crore where nearly 9 per cent of the margin, out of an expected 16 per cent regulatory profit, is perennially unrealised from the Government-owned utility of one of its main promoter States.
While State-owned banks help keep the business running by way of extending credit to bridge the working-capital gap, Damodar Valley Corporation periodically enhances its supplies according to the requirements of a promoter State and waits for its turn — maybe once in a decade — to recover part of the historic dues through Plan-fund settlements.
Mounting dues
According to the corporation, the State Government-controlled Jharkhand State Electricity Board consumes nearly one-fifth of its 3,200-MW generation and has run up a due of Rs 4,000 crore till March 2011. The dues have accumulated since 2005-06, when the Centre last recovered Rs 800 crore through Plan-fund settlement.
As against a monthly purchase of Rs 100-crore worth of electricity, the board pays Rs 50 crore upfront (through revolving letters of credit) — the rest remains unpaid.
Historically — almost ever since the statutory organisation was created soon after the Independence by the then Bihar, West Bengal and the Union Governments — the State has never paid for the electricity it consumes.
Cash-strapped
As against total sales of electricity worth nearly 550 crore a month, at least Rs 50 crore remains unrealised from the board.
While the cash-strapped corporation has been lobbying at the Centre for nearly one year now to settle part of the dues, the board does its bit by disputing the claim and letting the dues pile up. The corporation management, governed directly by the Jharkhand Government, never turns the supplies off but introduces a strange 15 per cent ‘regulation' on supplies — a mandatory requirement to get Plan-fund settlement from the Centre.
“Its not a regulation on supplies (total of over 660 MW a day), we regulate the frequency of supplies,” Corporation Chairman Mr R.N. Sen says, indicating that the ‘regulation' is done without causing discomfort to Jharkhand.
The corporation is now expecting the centre to settle Rs 1,700 crore — Rs 1,100 crore principle dues and Rs 600 crore delayed payment surcharge — from Plan allocation of the Eastern State. Mr Sen is hopeful of getting the money soon, as the board has reportedly agreed to the amount, after a series of reconciliation meetings in Delhi for last one year.
unbundling
Jharkhand has nothing to worry as generally such settlements are done from unutilised Budget allocations (to the State Government) under various heads.
Tripartite pact
Incidentally, in a tripartite agreement with the Reserve Bank of India and the Centre during the debt-securitisation programme in 2001, Jharkhand promised to restructure its ailing State electricity board.
More than a decade down the line and after availing the benefits of the Central scheme, the board is yet to be unbundled.
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