The Telegraph
Since 1st March, 1999
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CESC financial recast trips on Supreme Court order

Calcutta, Oct. 7: Power utility CESC Ltd will have to revisit plans for financial restructuring in the light of last week’s Supreme Court judgment, asking the West Bengal Electricity Regulatory Commission (WBERC) to revise tariff.

The R.P. Goenka-controlled utility will now have to present a fresh restructuring package to banks and financial institutions.

“We will have to rework the restructuring package based on numbers that will come from the regulatory commission. We will have to approach banks and FIs once we get the tariff structure from WBERC,” CESC managing director Sumantra Banerjee told The Telegraph.

CESC, staggering under a debt mountain of Rs 2986.86 crore, has been bleeding since 1998, and needs an immediate breather from its consortium of lenders. It had projected a Rs 300-crore mop-up from 18 lakh consumers through a tariff revision that had been cleared by a division bench of the Calcutta High Court in May.

The order had allowed CESC to charge Rs 3.96 per unit from consumers for the year 2000-01 and Rs 4 per unit for 2001-02. The utility had already started collecting revised tariffs from June. But a Supreme Court judgment last week restrained the utility from levying the increased tariffs until WBERC sets final prices.

“Till we get the restructuring package approved by banks and FIs, our company will have to service the debts. We are in constant talks with banks and FIs to work out something in the interim period,” the CESC chief said.

CESC owes its creditors Rs 2237.23 crore in secured loans and Rs 749.63 crore in unsecured debt. The lenders include multilateral lending agencies like International Finance Corporation, Asian Development Bank, Commonwealth Development Corporation and global investment banker Kleinwort Benson Limited.

The multilateral agencies have lent Rs 606.36 crore in secured loans, while banks and financial institutions have an exposure of Rs 1,300 crore.

The company has asked the banks and FIs to get its loans rescheduled, followed by an interest waiver. Some of these loans were raised at interest as high 16-17 per cent.

The utility had appointed J. P. Morgan to work out a financial restructuring package. The package is lying with banks and FIs. WBERC had directed CESC to file with the tariff petition for 2002-03 more details on loans taken separately from recognised and unrecognised institutions, specific purpose of loan, actual utilisation and effective steps taken to reduce loans and rates of interest as certain rates at which loans have been taken are very high from even recognised institutions.

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