Mounting losses make Haryana power utility sink
preeti parashar

Chandigarh

In what comes as a sad reflection on Haryana’s fiscal management, the banks have now stopped giving loans to the state power utilities. This is happening as they are not able to repay the loans, turning the amount borrowed into non performing assets (NPAs) of the banks. A top official of Uttar Haryana Bijli Vitran Nigam (UHBVN), on the condition of anonymity, told Daily Post: “As on August 31 this year, the utility has outstanding loans of Rs 10450 crore and the possibility of repaying the amount is grim. Now the banks have stopped lending us money and we have restricted purchasing short-term power as we do not have funds to pay the charges.” “We have a cash deficit of Rs 2000 crore per annum. We have approached the state government to allow us to up the power tariffs by at least 27 per cent to align the tariff with the cost of supply. The outstanding loans have mounted to the huge figure of Rs 10450 crore this year, up from Rs 994 crore in 2005-06.”

The state power utility—UHBVN—borrowed massively from banks during

2008-09 and 2009-10, raising the loan amount to Rs 4762 crore in 2008-09, up from Rs 2825 crore in 2007-08 and Rs 7943 crore in 2009-10. Analysing the monthly cash flow, the utility has to bear establishment

expenses of Rs 50 crore, power purchase charges of around Rs 480 crore,debt servicing charges of Rs 315 crore and other expenses of Rs 55 crore, totalling to a sum of Rs 900 crore.

Whereas the cash inflows comprise of collection from consumers of around Rs 315 crore, revised estimated subsidy of Rs 161 crore and equity receipts of Rs 14 crore, totalling to average monthly receipts of Rs 490 crore. “It clearly shows that the utility has a monthly cash deficit of Rs 10 crore. As on October 6, 2011, the total pending payment of power purchase was around Rs 2345.66 crore, while adding payments, the amount turns out to be Rs 2886.25 crore,” shared the official. He added:“Every reduction of AT&C loss by one per cent results in a revenue of Rs 50 to Rs 60 crore. So if we reduce the losses by up to five per cent, it will only fetch us Rs 250-300 crore per annum, while we have a cash deficit of over Rs 2000 crore per annum. To bridge the gap, we require aligning the tariff with the cost of supply and a hike of 27 per cent is required in the tariff to clear our dues.”