Senior executives of the Damodar Valley Corporation (DVC) have cautioned the board that the company may stare at a deep financial crisis bordering on collapse if the electricity distribution system is handed over to West Bengal.
The management’s proposal to hand over the power transmission system to the West Bengal Electricity Distribution Company and the transfer of the Durgapur barrage to the state has caused widespread internal dissent within the company. DVC trade unions have already threatened agitation over the move.
DVC was formed by an Act of Parliament in 1948 and was structured on the lines of Tennessee Valley Authority in the US, wherein the command area of the Damodar river was to be managed totally including flood control, irrigation, power generation, soil conservation and social upliftment.
DVC today, is a company equivalent to an independent power producer ever since it was brought under the purview of the Electricity Act, 2003. The PSU’s main stakeholders are the Union government and the state governments of Jharkhand and West Bengal who are also the beneficiaries.
The management has defended the move saying it has to look for alternatives to offload the huge debt burden of Rs 30,000 crore.
The financial stress is so acute that the firm had to borrow in order to disburse salaries to its employees.
The company’s acting chairman Arup Roy Choudhury had tasked senior executives to find a solution that is revenue neutral and not lead to job losses.
At this meeting, top officials said that the transfer of the transmission and distribution business to West Bengal would compound the financial crisis as 75 per cent of the cash flow comes from retail consumers in the DVC area.
The officials also warned that the transfer of the Durgapur barrage would lead to losing revenue from the industrial water business and would also affect hydel power projects and lead to “uncontrollable industrial relations issues”.
Countering the allegations on any move to hive off the core business of DVC, Roy Choudhury said the board is awaiting the report of the three-member team. “We will discuss the report of the directors. Any change in the structure of DVC cannot be unilaterally decided by the chairman. It will have to be approved by all the stakeholders,” Roy Choudhury told The Indian Express.