‘Madhya Pradesh discoms don’t owe anything to banks’

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SummaryState-owned power distribution companies in Madhya Pradesh do not have any outstanding dues to the banks and financial institutions, although they have incurred losses due to the gap between expenditure and revenue, a top state energy official said.

State-owned power distribution companies in Madhya Pradesh do not have any outstanding dues to the banks and financial institutions, although they have incurred losses due to the gap between expenditure and revenue, a top state energy official said.

The state government is funding discoms' losses with its own resources. “We do not have any liability to any bank or financial institution in India,” Mohammad Suleman, energy secretary, Madhya Pradesh government, told FE. That is the reason the state is not part of the Central government's Rs 1.9-lakh-crore transitional financial assistance programme for state-owned power discoms.

The state discoms are facing a revenue gap of Rs 0.4 a unit due to high technical and commercial losses, which stand at 34% against the regulatory norm of 20%,” he added. Discoms have filed annual tariff revision petition recently with the state electricity regulatory commission, which is expected to hike power distribution price.

Currently, the state has power availability of 9,000 MW against peak requirement of 9,500 MW. It has to resort to load shedding during peak hours given the prevailing electricity shortfall.

But once the 4,000-MW Sasan ultra mega power project (UMPP) gets commissioned, Madhya Pradesh will not only become power surplus but its electricity purchase cost will also come down significantly. The state has been allocated 1,500-MW electricity from the UMPP.

“After the entire Sasan capacity becomes operational, we will be able to deliver 24-hour power supply and our average power purchase cost will decline by Rs 0.53 a unit,” Suleman said. That translates into annual savings of over Rs 1,600 crore for the state.

Reliance Power has agreed to supply power from Sasan at Rs 1.19 a unit. The first unit of the project is expected to be commissioned by January. Uttarakhand, Haryana, Delhi and Rajasthan will also benefit from cheaper power from the Sasan project, which is based on captive coal.

Reliance is investing Rs 20,000 crore to the develop the Sasan UMPP which is India's largest integrated mining and power project.

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