Sample this. Recently, coal secretary S.S. Bopparai wrote a letter to state governments, demanding speedy clearance of total seb outstandings of Rs 6,500 crore to public sector coal companies. Bopparai also cited the example of the Madhya Pradesh government which had, in an unprecedented move, directed its electricity board to pay 60 per cent of the annual revenue accrued, following the recent tariff revision, to the coal company with full payment of current monthly bills. And last week, the Delhi Vidyut Board (dvb) reached a temporary truce with the National Thermal Power Corporation (ntpc) by agreeing to regular monthly payments to avoid the embarrassment of having supplies cut off. Reason: power minister Rangarajan Kumaramangalam's salvo to all chief ministers to get their respective boards to clear dues.
This is the most frustrating issue I have ever encountered in my life... tackling dvb is like handling a bunch of mentally sick people. And honestly, I feel like giving up because I do not think there is any government who can get work out of dvb, Kumaramangalam told Outlook in an exclusive interview.
Don't forget the total amount of the 40 per cent transmission loss works out to Rs 50 crore. That's a lot of money. No wonder dvb has stonewalled every privatisation move, Kumaramangalam continues, adding: In my opinion, besides the onion, bad power management was one of the major issues behind bjp's electoral setbacks in Delhi. Agrees Harry Dhaul, president, Independent Power Producers' Association (ippa): The problems of sebs like those in Delhi are likely to continue unless drastic measures are taken to check transmission losses and improve collections.
The matter is indeed serious. In the capital, dvb - for obvious reasons - generates just about a pitiable 350 MW, whereas the estimated peak demand during the summer is 2,600 MW! Worse, it owes its creditors more than Rs 6,000 crore. Across the country, the total outstandings of sebs touch a whopping Rs 20,000 crore.
We have categorically told the coal companies not to supply coal if there is any single default in the current month's payments. And that is the best way to realise dues. It happened once with Maharashtra and now the electricity board doesn't default, says Hari Narain, joint secretary, coal ministry. The ministry's tough stand is understandable - total outstandings against the coal companies have touched Rs 6,500 crore. This figure is despite good realisations since last November, when the coal companies started the cash and carry programme which requires power companies to make an advance payment equivalent to 90 per cent of the value of the coal. The coal ministry has also stipulated that the advance payment may be made at an interval of 10 days for one-third of the monthly-linked quantity.
Sources said coal minister Dilip Ray is personally meeting several chief ministers - like Digvijay Singh and N. Chandrababu Naidu - to sort out the issues. In January this year, Naidu had taken strong exception to Neyveli Lignite Corporation's chairman holding the state as a major defaulter and threatening to stop power supplies to it. The outstandings hover anywhere between Rs 100 crore and Rs 800 crore. Despite clearing its dues fast, the Madhya Pradesh seb owes nearly Rs 548 crores to Coal India Ltd (cil) and Maharashtra, Rs 751 crore.
Whatever realisation is happening is only because of the pressure. Yet, the existing arrangement suffers because the sebs do not open the letter of credit. As a result, advance payment is erratic. And coal supplies to power stations are periodically switched on and off, Narain said. He added that while cil wants the state electricity boards to open the letters of credit, the boards do not want to overburden their already shaky financial position.
But Kumaramangalam is still hopeful. He revealed that within three weeks, the long-awaited finance ministry plan to securitise around Rs 20,000 crore of seb dues to cil, ntpc, National Hydro-electric Power Corporation (nhpc) and Powergrid Corporation will come through.
We will not be able to do justice to the entire amount but at least 40 per cent of it will be securitised, the minister said. The securitisation plan, announced by finance minister Yashwant Sinha in last year's budget, revolved around marketing the outstanding dues by converting them into three- to five-year securities, a task to be carried out by the psus concerned, and hawking them to consumers. As a safety measure, these instruments would have had a central guarantee for easier marketability.
The move floundered on the crucial issue of the central guarantee. The finance ministry argued that the cover could only be given if in case of default or at the time of maturity, the government was in a position to deduct the devolution on the Centre from the central plan assistance to state governments. The Planning Commission refused, saying that already 15 per cent of the central assistance to the states was being deducted to pay for their outstandings with cil, ntpc, nhpc and Powergrid up to December '96, and there was no further scope for further deductions.
But, Kumaramangalam says, there is a move to extend the tenure of the securities to between seven and 10 years to allow for the current spate of deductions to be over and clear the way for a central guarantee. There are also talks of making them tax-free. The onus now is on both Kumaramangalam and Yashwant Sinha to enforce the move and realise the benefits in a country where coal provides nearly 70 per cent of commercial energy. Otherwise, the government could be faced with a financial disaster.
