Dues forcing KPCL to sell equity

Dues forcing KPCL to sell equity

Escoms owe the company Rs 5,355 cr; SBI advises sale of 25 pc stake

The Corporation plans to use the proceeds from the divestment to cover its losses arising out of the long-pending dues of Rs 5355 crore from the Karanataka Power Transmission Corporation Limited (KPTCL) and all the Electricity Supply Companies (escoms).

At a marathon meeting held on April 17, the SBI Capital Markets Limited (SBICML), the advisor assigned by the KPCL to assess the valuation of the company, advised the State Government to sell a portion of the equity through private placement to institutional investors.

“The target institutional investors can be like Foriegn Investors, public sector banks and others as it is necessary to clean up the balance sheet,” the SBICML authorities during their presentation.

According to SBICML, the divestment help reduce the strain on the State finances as the Government need not worry about clearing of dues of KPCL. “It will also be helpful in fund raising for new projects,” said SBICML.

Sources in the power sector said the proposal to sell the equity was pending since several years as the State power utilities dues were increasing every year.

“Outstandings increased from Rs 313 crore in the financial year 1993 to Rs 5,355 crore as on April 15, 2010. KPCL has even written off dues to the extent of Rs 1483 crore,” said sources.


The KPCL’s debtors include KPTCL Rs 1437 crore; Bescom Rs. 711 crore; Hubli Electricity Supply Company (Hescom) Rs 1137 crore; Gulbarga Electricity Supply Company Rs 849 crore and Chamundeshwari Electricity Supply Corporation (CESC) Rs. 822 crore rupees; and Mangalore Electricity Supply Company Rs 399 crore.

The Company also has an outstanding short term loan of Rs 3,600 crore as on March 18, 2000. The short term loan in the year 2000-01 was Rs. 345 crore.

SBICML has suggested several measures like directing the escoms to come out with a clear road map of managing their finances or privatisation of escoms.    

Confirming the divestmnet proposal, another source said  the process would be slow as the Government has promised to bail out KPCL by paying a share of the dues to help improve the company’s Crisil ratings.