'Cabinet to discuss debt recast of discoms'

'Cabinet to discuss debt recast of discoms'

Moily says move aimed at making utilities tangible

Union Power Minister Veerappa Moily on Tuesday said the Union Cabinet is expected to take up the power ministry’s proposal to restructure debt of Rs 2 lakh crore pertaining to distribution utilities but made it clear that it would not be a bailout package.

Moily clarified that it would be a move to make operations of distribution utilities sustainable and put them on sound track.  

Moily, who reviewed Maharashtra’s power sector during his meeting with state Chief Minister Prithviraj Chavan,  told journalists here that the debt restructuring would be based on 10 parameters which include performance, regular tariff revision, reduction of distribution losses by distribution utilities. “The Power Ministry has moved its note and the Cabinet is likely to take it up in three weeks," said Moily.

According to him, nearly 25 state utilities, including Maharashtra, have revised their tariffs . Besides, Moily pointed out that distribution utilities are also stepping up efforts to improve performance and collection efficiency. "Maharashtra is one of the states which needs to be mentioned here as its distribution utility has brought down distribution losses to 16.03 per cent from 29.6 per cent while collection has soared to 97.2 per cent,” the minister noted.

Moily emphasised the need for distribution utilities to start functioning in a more viable way.

Moreover, Moily said the CAG report on coal would not have any adverse impact on the proposed capacity addition of 84,000 MW being proposed during 12th five year plan.  

“Implementation of 80,000 MW of power projects are under various stages of which substantial addition will be done through coal based power projects for which coal allocation is not a problem,” the minister informed. According to him, coal blocks, which would be de-allocated or cancelled would not have any impact on the proposed capacity addition.

However, Moily clarified that coal block allocation can be cancelled in the wake of non compliance with competitive tariff bidding process.

On the state’s reluctance to provide open access to 1 MW and above consumers, Moliy admitted that states fear that the cross subsidy structure would collapse if they have to give 42 per cent of the power to open access.

 “The issue has been discussed at length with states on how cross subsidy level is maintained if open access is put in place. Even power regulators also have been asked to look into the issue,” the minister said.

He assured the Maharashtra government that it would take up the issue of adequate allocation of gas from KG D6 and under administered price mechanism for Dabhol and Uran gas based power projects.  On Dabhol project, Moily said he would seek Prime Minister’s intervention so that the gas would be supplied on the lines of fertiliser sector.

Earlier, Maharashtra chief minister Prithviraj Chavan argued that due to dip in gas allocation the 1,960 MW Dabhol project was operating at one third of its total capacity so also state-run generation company’s 850 MW Uran gas project.

Chavan reminded Moily that the Empowered Group of Ministers had already given in writing that Dabhol would be supplied gas on a priority basis as done in case of fertilizer sector.

Furthermore, Moily said that he would take up matter with Coal India for additional coal supply to the state and also meet the minister of environment and forests for an early environment and forest clearances for state power projects.

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