Haryana government has given in-principle approval to the financial restructuring plan of power distribution companies,under which the state will take over half of Rs 19,000 crore short-term liabilities and convert them into bonds.
Haryana Chief Minister Bhupinder Singh Hooda has given in-principle approval to our financial restructuring scheme, Chairman and Managing Director of Haryana Power Utilities,Devendar Singh told PTI.
Uttar Haryana Bijli Vitran Nigam and Dakshin Haryana Bijli Vitran Nigam are two power utilities of Haryana.
As per the financial restructuring programme,state government will take over half of Rs 19,000 crore of short term liabilities of power utilities and they would be converted into bonds to be issued to lenders,backed by state government guarantees.
The state finance department will see how much fiscal space is available with to take over the debt of power utilities, he said.
The rest of debt liabilities will be rescheduled and three years moratorium would be on payment of principal amount,he said.
The Cabinet Committee on Economic Affairs approved financial restructuring scheme for state power distribution companies in the country last month.
Our focus will be now on improving efficiency in performance of power distribution companies and bring down the gap between average cost of supply and average revenue realized to maximum extent possible. Our target is to turn profitable in next three years, he said. The poor fiscal health of power utilities could be gauged from the fact that both discoms are facing short term liabilities of Rs 19,000 crore and financial losses to the tune of Rs 4,000 crore.
At present,both discoms are facing a gap of Rs 2 per unit between average cost of supply and average revenue realised from power supply. They are also bearing 90 paise to Re 1 a unit as interest burden on account of huge short-term liabilities. Huge amount of power theft is also a cause of concern for power utilities,which has become a stumbling block in revenue realisation,official sources said.
Costly power purchases have also put a strain on utilities resources. In last 11 years,the cost of power purchase (accounts for 80 per cent of supply cost) for both discoms have surged by 300 per cent. Tariff,however,has just gone up by 40-45 per cent,causing sharp increase in debt burden for working capital requirements and debt servicing,he said.