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The financial crunch has cast shadows over timely commissioning of nearly 1,250-MW capacity-addition programmes undertaken by the State Government-controlled power utilities in West Bengal. Cash crunch (resulting out of stagnant tariffs) has already impacted the financial health of utilities, resulting in huge outstanding debt to coal companies and an average daily-supply shortfall of nearly 300-500 MW in the State.
According to sources, failure on the part of the State Government to bring in equity contribution may force lenders, including the Power Finance Corporation, to stop loan disbursements to 2-by-500-MW capacity addition at the Sagardighi thermal power station of West Bengal Power Development Corporation and the 250-MW unit eight of Durgapur Projects Ltd (DPL).
The Rs 5,500-crore Sagardighi project is scheduled to be commissioned in April 2014. Construction for the project began in April this year. The State was scheduled to bring in about Rs 200 crore as equity component in the project in this fiscal.
In comparison, construction of the Rs 1,300-crore DPL unit is in an advanced stage and is scheduled to be commissioned in March 2013. In addition to failure to infuse requisite equity, the State Government is yet to grant the ‘counter guarantee' on loan repayment to the lenders. The guarantee is required as DPL is a loss-making outfit.
Equity infusion doubtful
Sources suggest that while the State is expected to offer the guarantee to DPL shortly, due equity infusion is doubtful. They say lenders are currently delaying disbursements in both the projects, resulting in running outstanding debt to project contractors.
“We are yet to get the due payments for Sagardighi project even after six months from the beginning of construction. While we are keeping on, there will be a natural limit to stretch ourselves,” a project contractor said. The situation is no better at DPL.
In its bid to not let the power tariff go, the State has already had to sacrifice receivables to the tune of Rs 500 crore annually on electricity duty. The overall growth in tax collection has also reportedly hit a slow track when compared to the same period last year and is far below the projected growth of 30 per cent in own-tax collection.
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