When will Spanco pay its dues?

Ashish RoyAshish Roy, TNN |
Mar 15, 2012, 04.47AM IST

NAGPUR: MSEDCL's franchisee model seems to have created more problems than solutions. Instead of increasing MSEDCL's revenue, city power franchisee Spanco is unable to clear off its Rs 200 crore plus dues since months. Spanco officials claim that the reason is negative sentiment among banks towards power sector, which is delaying the disbursement of loans they have sought.

This apart, Spanco has not paid the entire amount that it collected from city consumers through bills to MSEDCL. The company has claimed that this amount has been utilized for operation and maintenance of power infrastructure, capital expenditure in power infrastructure, salaries, rents, etc. The officials categorically deny that money from franchisee operations have been used elsewhere but have not given the break up so far.

As on date, the arrears owed by Spanco towards MSEDCL stands at Rs 215 crore. MSEDCL had started an escrow account in January and this had brought down the dues from Rs 250 crore plus to Rs 200 crore plus. Spanco paid more money to MSEDCL in January and February than earlier months. This had reduced the arrears from Rs 241 crore in December end to Rs 164 crore in February end. But the arrears have increased again.

Spanco chairman Kapil Puri had promised to clear off the dues well before March end. Now, the company officials say that they will pay by March 31. A senior official said, "We have started the process of securing loan from several PSU banks but non performance of state power companies has generated huge NPAs. This has made the bank wary of lending to power companies. If anybody doubts us he can go through reports in financial media for last six months.

"Despite all these hurdles we paid Rs 140 crore to MSEDCL in December-February period. We have made significant investment in improving the power infrastructure of the city for catering to the power demand in summer," the official said.

MSEDCL officials have been parrying questions on this issue. They have given vague replies regarding action against Spanco. Many times they have taken action only to retract it after a few days. Now, they have refused to comment citing the restriction on officials during a legislature session.

A middle level MSEDCL officer said that while there was no doubt that power companies, including MSEDCL, were finding it difficult to obtain loans, Spanco should be asked to make public what efforts it has made towards securing funds. It should also be asked to provide a break up of money that it collected from consumers. "If they are really helpless, then the negative sentiment among the people will reduce when the facts are made public. Transparency is the need of the hour," the officer insisted