Govt plans to bring discoms out of debt
Tribune News Service

Chandigarh/hisar, Nov 3
With both the power utilities — Uttar Haryana Bijli Vitran Nigam (UHBVN) and Dakshin Haryana Bijli Vitran Nigam (DHBVN) — in the red due to short-term liabilities to the tune of Rs 19,000 crore, the state government has initiated a process for financial restructuring plan (FRP) of the power distribution companies.

Under the FRP, the state government would take over half of the Rs
19,000 crore short-term liabilities of the power utilities and they
would be converted into bonds to be issued to lenders, backed by the
state government guarantees. The rest of the liabilities would be
rescheduled and there would be a three-year moratorium on payment of
the principal amount, said a source here today.

“The power utilities are committed to implement the Central
Government’s FRP in letter and spirit and for that the consumers
should be ready to face certain hard decisions, including payment of
fuel surcharge adjustment (FSA) for a temporary period to save the
power sector from financial collapse,” said Devender Singh, chairman
of the UHBVN and DHBVN.

The source said with banks wary of advancing loans to the distribution
companies in the wake of heavy debts and accumulated losses pegged at
over Rs 8,830 crore, the FRP would provide the last chance to the
state to bring the power sector on the track. Currently, both the
distribution companies were facing a gap of nearly Rs 2.5 per unit
between average cost of supply (ACS) and average revenue realised
(ARR), he said, adding that not only that, the distribution companies
were also bearing 90 paise to Rs 1 a unit as interest burden on
account of short-term liabilities.

Costly power purchases had bled the distribution companies white over
the years. In the past 11 years, the cost of power purchase--which
accounts for 80 per cent of the cost of supply--had surged 300 per
cent while tariff had just gone up by 60-70 per cent, resulting into