Ranchi/Calcutta, Aug. 20: Power utility Damodar Valley Corporation is expecting an early clearance of dues from the Jharkhand State Electricity Board to tide itself over an impending generation hurdle arising out of its inability to pay for coal.
The cash will also help the PSU to service its short-term debts due in September.
A review meeting took place today at Ranchi between the officials of the DVC and the Jharkhand power department in the presence of Union power minister Piyush Goyal.
In the meeting, a financial restructuring package was discussed and the outstanding dues of the Jharkhand Urja Vikas Nigam Ltd (JUVNL) on account of power purchase has been scaled down from Rs 8,000 crore to Rs 4,370 crore following the reconciliation of arrear outstanding bills undertaken by both the parties.
Additional power secretary R.N. Choubey, who is also the chairman of the DVC, was present at the meeting.
DVC officials said the company had been forced to scale down power generation by around 1,000 mega watt (MW) on account of the non-settlement of dues and the issue was highlighted in the meeting.
The DVC procures the bulk of its coal requirement from Coal India. It has accumulated dues of Rs 1,403 crore against the supply of coal. Moreover, Coal India has put in place a cash-and-carry policy, which does not allow supply on credit to power companies.
With generation becoming uncertain, it would have to resort to load sheddings and load restrictions for consumers in the valley area. The DVC supplies power to industrial consumers in Bengal and Jharkhand, besides the Coal India subsidiaries.
DVC officials said the JUVNL was also irregular in paying its monthly power purchase bills averaging Rs 150-160 crore per month, adding to its cash crunch.
Goyal has assured that the Rs 3,000-crore package, allocated to the then Jharkhand State Electricity Board under the financial restructuring plan to help it clear its dues, would be released at the earliest.
Sources said the minister gave the assurance that a restructuring package would be placed before the cabinet for its concurrence.
The DVC has an impending debt service obligation of around Rs 1,000 crore in September on account of the repayment of short-term loans.
Unless some funds are released, the company could potentially default on such borrowings.
Being unable to generate sufficient cash flows from its own operations, the DVC had resorted to revolving a line of credit from banks with a tenure of one year and renewal on the repayment of interest.