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Journalism of Courage
NEW DELHI, MARCH 30: Maharashtra State Electricity Board (MSEB) has received a shot in the arm with the centre’s decision to grant concessions under the amended Section 10 (23G) of the Income Tax Act, 1961, and rule 2E of the Income Tax Rule, 1962. This will enable MSEB to approach the retail debt market with tax-free bonds. It plans to float a Rs 350-crore bond issue for strengthening the distribution system in 15 districts.
MSEB chairman Asoke Basak said the Central Board of Direct Taxes (CBDT) has conceded its demand for reliefs under the IT Act. The CBDT has also accepted MSEB’s view that it was an enterprise wholly engaged in the business of developing, maintaining and operating an infrastructure facility.
Basak said the MSEB board will soon take a decision on approaching the market. "It is likely that the bond issue will be floated in April," he added.
According to him, since MSEB enjoys a good rating, it may not seek a government guarantee for raising funds. The MSEB had successfully raised about Rs 750 crore without government guarantee to pick up 30 per cent equity in the Dabhol power project.
The CBDT had earlier denied MSEB’s plea and said an enterprise seeking approval should have a separate identity, goal, organisation and financing arrangements. "As MSEB has been in existence since 1940 and engaged in the power generation business, the organisation as such may not qualify as an infrastructure facility in terms of Section 10 (23G). Hence, prima facie it appears that MSEB may not be entitled for approval of such section," it noted.
Basak said MSEB had expressed its inability to create a special purpose vehicle (SPV) for seeking exemption under section 10 (23G). "We have made it clear to the CBDT that it would not be practical and feasible for MSEB or, for that matter, any state electricity board to float a SPV for seeking exemption under section 10 (23G). At any point of time, MSEB takes up several projects, all of which qualify for the benefits of section 10 (23G)," Basak said.
"If MSEB is required to float a SPV for each of its projects, it will not only lead to multiplicity of organisational complexities, but also cause precious loss of time," Basak added.
All MSEB projects related to generation and distribution of power on or after April 1, 1993, should be entitled for exemption under Section 10 (23G), it was argued.
The state electricity board had also appealed to the CBDT to devise a mechanism to ensure proper utilisation of funds raised with benefits of Section 10 (23G). It had also asked the CBDT not to deny MSEB exemption under Section 10 (23G) on the whole and restrict it in any way from raising funds at low cost.
MSEB to crack whip on defaulters
MUMBAI: Maharashtra State Electricity Board (MSEB) has decided to crack down on defaulters in a bid to recover arrears amounting to Rs 2,800 crore. A special drive all over the state will be launched from April 1 to May 31.
MSEB chairman Asoke Basak said that MSEB will have to recover as high as Rs 650 crore from agricultural consumers and the balance from industrial, commercial and residential consumers. Similarly, MSEB will have to concentrate on the recovery of arrears from local self governments.
Basak who completed one year as MSEB chairman was optimistic to recover at least Rs 500 crore during the proposed drive. "This recovery will greatly help MSEB to incur expenditure on strengthening transmission and distribution system," he opined.
