Mumbai, July 2 (IANS) Faced with a cash crunch, a debt burden of Rs 38,282 crore and falling revenues in view of Covid-19 pandemic, the Maharashtra Power Department on Thursday sought a grant of Rs 10,000 crore to tide over the immediate crisis.
In a letter to Union Power Minister R. K. Singh, Energy Minister Nitin Raut said that the country’s largest power distributor, MSEDCL has been grappling with acute cash shortage in view of the recent 3-month lockdown, which continues in most parts of the state.
While 60 per cent of the state’s power revenue comes from the industrial and commercial sector, the near-total halt of all industrial and commercial consumption in lockdown resulted in almost no revenues in April-May.
All consumers have been granted extensions to clear their electricity dues, but the MSEDCL is facing a cash crisis to clear its fixed costs like power purchase, salaries, taxes, etc. besides clearing the payments of power generators since April.
“Although this had a major impact between April-June 2020, its cascading effects will last for the next few months and it is likely to continue throughout the year. With the lower realization of revenue, it will be difficult for MSEDCL to make both ends meet,”said Raut.
Anticipating cash shortages for 2020-2021, the MSEDCL had also approached banks and FIs, but they did not respond, while delayed tariff approvals by the Maharashtra Electricity Regulatory Authority (MERC) and inadequate tariffs have hurt the liquidity position of the company, he added.
Additionally worrying is the MSEDCL’s piled up debt burden of Rs 38,282 crore, comprising Rs 18,600 crore during September 2018-March 2020, Rs 16,720 crore loans for various infra projects, and an overdraft of Rs 3,500 crore for working capital.
For this, the MSEDCL presently spends around Rs 900 crore per month for loan repayments and interest, so its financials could worsen if the debt burden of additional loans taken due to the pandemic is also shifted on the company.
Simultaneously, it is mandatory to pay maintenance and repair costs, besides paying the power generation companies for ensuring continuous supply in addition to the accumulated outstanding payments on this count, Raut said.
The Minister pointed out that, despite the Centre announcing a Special Economic Package on May 13, the MSEDCL would hardly benefit in view of its guidelines, and it would end up entailing an extra burden of Rs 500 crore per annum on the state government which would ultimately fall on the consumers.
In view of the precarious situation, Raut urged the Centre to provide financial assistance to MSEDCL by way of grant of Rs 10,000 crore to tide over its liquidity crunch.