According to an NTPC statement, the arrears from the eastern region have accumulated to about Rs 3,000 crore.

"NTPC has been constrained to curtail supplies from Farakka due to mounting arrears of SEBs in the eastern region and in absence of any response from the SEB of West Bengal and the state government to repeated efforts of the corporation to ameliorate the payment crisis created due to mounting outstanding dues," the statement said.

NTPC had issued notices to the governments of Orissa, West Bengal and Bihar on August 24 regarding closure of its eastern region power stations - Farakka, Kahalgaon and Talcher - effective September 1. The statement said that NTPC's chairman and managing director, Rajendra Singh, had also met the chief minister of Orissa,where it was decided to enhance the LC by Gridco from Rs 28 crore to Rs 32 crore within September 1998, along with ensuring the payment of current dues in full and issue of bonds duly guaranteed by the Orissa government for Rs 200 crore by September 1998, as partial settlement of NTPC's outstanding dues. On the basis of action taken by the Orissa government and assurance of payment of dues in full, NTPC will maintain full generation of 460mw of the Talcher thermal power station, which is dedicated to Orissa.

It will also maintain adequate generation at its 1,000mw Talcher super thermal power station to meet export commitments to the southern and western regions.

Singh had also met the Bihar chief minister, the power secretary and other senior officials of the West Bengal government. He received similar assurances from the respective officials.

During the discussions, the BIhar chief minister assured that the Bihar State Electricity Board (BSEB) would pay NTPC Rs 350 crore before September 30, and forthe balance amount, another meeting would take place between the BSEB chairman and NTPC before the end of the month.

Following this, NTPC decided to postpone the curtailment from its eastern region power stations up to October 8, by which time, a clear picture would emerge regarding maturing of various commitments given at the highest level of the states and the SEBs. No action was, however, taken by Bihar and West Bengal between September 7 and October 10, either to enhance payments, or increase the LC amount, or for the liquidation of arrears. This forced NTPC to curtail the power supplies in these states and notices were issued to West Bengal, Bihar and the Damodar Valley Corporation (DVC). NTPC, which supplies about 400mw of power to Bihar daily of the 1,100 mw required by the state, had threatened on Saturday evening that power supply to the BSEB would be disconnected from midnight on account of non-payment of arrears.

The NTPC statement said that BSEB's outstanding dues up to September 1998 hadreached Rs 1,390.39 crore, including the late payment surcharge of Rs 491.17 crore.

"Since the WBSEB, DVC and the BSEB had failed to clear their dues, NTPC was facing acute financial crunch, and as such it was finding it difficult to run the power stations in the eastern region", the statement said.