Cash-strapped state power utilities may not get loans easily from the Rural Electrification Corporation Limited (REC) because the lenders are worried that the state regulator affects the financial health of these utilities by delaying tariff revisions.
The state’s power distribution company, Mahavitaran, wants a loan of Rs5,500 crore for upgrading infrastructure from the leading lender REC. The generation company, Mahagenco, also wants undisclosed money for its upcoming 1×660 megawatt thermal project in Nasik and 250 MW units at its Paras facility. Sources said the amount could be more than Rs10,000. Furthermore, State’s transmission arm, Mahatransco, has applied for a loan of Rs2000 crore for upgrading its network of wires.
The three companies together owe REC more than Rs16,800 crore, as on March 31, 2012. The loans sought are in addition to the existing debt which is being serviced as per scheduled.
Rajeev Sharma, chief of REC, expressed his concerns when he met the managing directors of the three state companies on Thursday. REC also made its concern public through a press release. Sharma wanted the companies to seek removal of the 10% cap in the fuel adjustment cost (FAC), which restricts full recovery of increase in the power purchase cost. Others states don’t have such a regulation and they are able to recover costs easily from their consumers.
Off late, state utilities have been debating with Maharashtra Electricity Regulatory Commission (MERC) on issues related to their finance and tariff. MERC officials were unavailable for comment, while company bosses refused to comment.