Calcutta, Jan. 11: The Bengal government has set a condition for accepting a Narendra Modi government scheme that aims to ease the debt burden of power distribution companies, a project that 15 states have already joined.
Under the Ujwal Discom Assurance Yojna (Uday), states are expected to take over 75 per cent of the debt of their electricity distribution companies and service the amount. At the Bengal Global Business Summit last week, Union power minister Piyush Goyal urged the Mamata Banerjee government to sign up for the scheme.
The Bengal government, however, wants the West Bengal State Electricity Distribution Company Limited (WBSEDCL) to continue servicing its debt.
Debt servicing means paying the interest and returning the principal over a period of time. At present, the annual debt servicing cost of WBSEDCL is around Rs 1,000 crore.
Sources said the cash-strapped state government had been trying to explain to the Centre the difficulty the exchequer would face if it had to pay the interest and repay the principal of Rs 6,000 crore of the Rs 8,000-crore debt burden of WBSEDCL (75 per cent of the total debt).
Bengal is reeling from a debt burden, which is expected to breach the Rs 3 lakh crore mark by the end of this fiscal, and if the servicing burden is added to the Rs 28,000 crore that the state has to cough up annually, it would be "problematic", a source said.
He said the state had proposed that it would take over the Rs 6,000-crore debt, raise the amount from the market by issuing 10-year or 15-year bonds, and hand over the money to WBSEDCL. That way, the debt burden in the books of WBSEDCL will come down to Rs 2,000 crore.
Besides, the conversion of the debt into bonds will lower the interest from over 11 per cent to around 8 per cent.
The power distribution company is indebted to banks, which have been charging around 11 per cent on the borrowed amount.
"WBSEDCL can easily pay Rs 700 crore annually to service the restructured debt. We will join Uday if the Centre allows a tweak in the proposal," the source said.
Fifteen states, including Chhattisgarh, Andhra Pradesh, Jharkhand, Rajasthan, Punjab and Jammu and Kashmir, have already signed up for the scheme.
A source in the Union power ministry said it would be a "wise" move if Bengal joined the scheme as WBSEDCL was suffering losses on account of theft and transmission and billing inefficiencies.
WBSEDCL, according to him, has not been able to crack down on electricity theft. Mamata had approved an anti-theft drive after coming to power but scrapped it a few months later following the deaths of two protesters in police firing in South 24-Paraganas' Mograhat in December 2011.
The "power theft-prone" areas of Bengal are spread over North and South 24-Parganas, Burdwan, Birbhum, Murshidabad, North and South Dinajpur and Darjeeling. In some pockets, WBSEDCL loses to theft 70 to 80 per cent of the power supplied.
Had the crackdown been carried out successfully, the utility could have saved at least Rs 300 crore annually, which would have added up to around Rs 1,300 crore by now.
Besides, WBSEDCL had been hit hard in the 2011-12 fiscal because the chief minister did not allow tariff hikes by public sector utilities. By the time she let WBSEDCL increase tariff in late 2012, it had run up a deficit of nearly Rs 1,500 crore and was borrowing heavily to make ends meet.
"WBSEDCL has written to the state government, formally informing it of the utility's willingness to be a part of Uday. But the government has to clear it," an official said.
Sources said they were expecting Bengal to join Uday because of Mamata's relations with Union power minister Goyal, who had heaped praise on the chief minister during his address at the investment summit.
"Joining Uday will help give WBSEDCL a timely facelift. We hope that the co-operative federalism approach of the Centre will prompt it to accept the state's proposal," the official said.
