Power transmission lines in Bhubaneswar. Telegraph picture

Cuttack, April 20: Driven by revenue gap marked with huge cash loss in supplying power to the distribution companies, the Gridco is managing its cash deficit by borrowing from banks and financial institutions to ensure power supply to Orissa. The situation has worsened in the past three years, reaching a “neck-break level” and it has almost landed in a “debt trap”.

In an affidavit filed in OrIssa High Court in a PIL, the Gridco said it had already borrowed Rs 3,000 crore during the past three financial years to meet its revenue gap owing to inadequate tariff allowed by the Orissa Electricity Regulatory Commission (OERC).

“The total deficit has now reached an unsustainable level of about Rs 4,300 crore. Hence, there is hardly any avenues available before the Gridco to raise additional debt to finance the whooping deficit close to Rs 3,000 crore, if the new bulk supply price (BSP) is not allowed to be implemented forthwith,” Gridco’s director (finance and corporate affairs) Bibhu Prasad Mohapatra said in the counter affidavit.

On March 31, the two-judge bench of Justice B.P. Das and Justice B.K. Mishra issued the interim stay order in response to the PIL which had challenged the OERC’s order enhancing tariff of electricity for 2011- 2012 from April 1.

“Gridco experienced huge cash loss of around Rs 100 crores every month during 2010-11 to pay monthly bills of the generators,” Mohapatra said.

“Its borrowing has reached a neck-break level and it has almost landed in a debt trap ensuring adequate power supply to Orissa at an affordable price,” he said.

According to the affidavit, the Gridco, during 2010-11, procured power at an average cost of 208 paise per unit, but supplied it to the DISCOMs at the OERC’s approved average BSP of 170 paise per unit, incurring a loss of 38 paise per unit on an average excluding other financial and operating costs.

“This translates into cash loss of about Rs 800 crore only due to negative gross margin in supply of about 21,000 mega unit,” Gridco said.

On possible repercussions of the high court’s interim order staying collection of the hiked tariff, the Gridco said: “If the revised BSP of 231.65 paise per unit is not allowed for the supply of 22,477 mega units of power to the DISCOMs and the new tariff is not allowed, Gridco will experience cash shortage of Rs 1,380.08 crore. With addition to the revenue gap of Rs 745.05 crore left by the OERC the aggregate cash deficit would be Rs 2,126.13 crore,” it said.

“The consequential effect on Gridco and the power sector in Orissa will be disastrous. The Gridco will fail to make payment of the generators bills resulting in regulation of power supply by the generators which may stretch up to six hours or more every day,” the affidavit claimed.

At present, the power purchase cost of Gridco has significantly increased due to fall in share of low cost hydro power from 57 per cent five years ago to about 17 per cent now.

While hydro power costs about 66 paise per unit, thermal power costs as high as 331 per unit.