It is an unenviable task cut out for Bihar’s Deputy Chief Minister Sushil Kumar Modi, who also holds the finance portfolio. In the last few months that he has been in office, he has learnt the hard way that managing the state’s fragile finances is not easy.
Power bills continue to mount and remain unpaid. Cheques issued by Bihar State Electricity Board (BSEB) to central PSUs like NTPC continue to bounce frequently. Added to the mounting monthly unpaid power bills is the BSEB dues to Life Insurance Corporation in the range of over Rs 550 crore.
Only way out, as the new political bosses in Bihar have learnt, is to follow the footsteps of Uttar Pradesh government that sold its Unchhahar power station to settle power bills with NTPC. The government, sources say, would sell 50 per cent of equity in Muzzaffarpur Thermal Power Station to NTPC to settle its dues as well as clear the outstanding amount to LIC.
In the recent past, bouncing cheques in power sector has become order of the day, forcing the Nitish Kumar government to go for the unenviable task of selling a part of power station assets.
For instance, a cheque worth Rs 82.50 crore issued to NTPC on February 3, 2006 bounced as Canara Bank in Patna refused to release funds since BSEB did not have adequate funds to cover the payment. The payments were due to NTPC against power supplies made to the electricity-starved state in November last year. Similarly, post-dated cheques worth Rs 111.48 crore issued to NTPC by BSEB payable, on March 3, 2006, also bounced. This is against NTPC power supplies to the state during December 2005. While the earlier default was rectified, the December 2005 bill was unpaid, said sources.
{{/usCountry}}For instance, a cheque worth Rs 82.50 crore issued to NTPC on February 3, 2006 bounced as Canara Bank in Patna refused to release funds since BSEB did not have adequate funds to cover the payment. The payments were due to NTPC against power supplies made to the electricity-starved state in November last year. Similarly, post-dated cheques worth Rs 111.48 crore issued to NTPC by BSEB payable, on March 3, 2006, also bounced. This is against NTPC power supplies to the state during December 2005. While the earlier default was rectified, the December 2005 bill was unpaid, said sources.
{{/usCountry}}For January 2006 power bills, the story is different. It managed to open a letter of credit for Rs100.34 crore to cover most of BSEB’s monthly payments. But, Canara Bank refused to make any overdraft worth Rs12.88 crore against BSEB account.
Since the letter of credit was not recouped, the BSEB continued to default against bills for February 2006 power consumption in the state. This time, Canara Bank refused to release Rs102.34 crore which remain unpaid.