According to MSEB estimates, it would require Rs 4,000 crore annually to be escrowed from its revenues for Bhadravati project.

MSEB sources told The Financial Express that "it is already constrained in providing escrow account in favour of independent power producers (IPPs) in the wake of precarious financial conditions." The current trend of the revenue collection would not be sufficient to meet the combined escrow obligation of the IPPs in the coming years.

MSEB's inability to recover arrears amounting to Rs 3,775 crore has further worsened its financial situation. MSEB has already provided an escrow cover in favour of Dabhol Power Company (DPC) and revenues from 14 circles amounting to Rs5,243.63 crore per annum flow into excrow account.

The state government has also taken a decision to provide escrow cover to Reliance's 410 mw power project at Patalganga.

MSEB's escrow commitment for DPC will be Rs 5,237.8 crore in 1999-2000, Rs 5,775.9 crore in 2000-2001, Rs 6,369.3 crore in 2001-2002 and Rs 7,023.6 crore in 2002-2003 respectively.

Its escrow commitment for the Reliance power project will shoot up from Rs 927.84 crore to Rs 1,038.2 crore to Rs 1,162.5 crore to Rs 1,302.5 crore during this period.

MSEB's escrow commitment for Power Finance Corporation will be Rs 720 crore, Rs 756 crore, Rs 793.8 crore and Rs 833.49 crore respectively while its escrow commitment for the state-run Rural Electrification Corporation would be Rs 264 crore, Rs 277.2 crore, Rs 291.06 crore and Rs 305.61 crore respectively.

As against the total revenue collections of Rs 8,888.5 crore, MSEB's escrow commitments for 1999-00 were reported at Rs 8,399.6 crore. For 2000-01, the revenue collection would be Rs9,876.2 crore, escrow commitment - Rs 9,248 crore.

MSEB has estimated a revenue collection of Rs 10,991 crore as against the escrow commitment of Rs 10,270 crore for 2001-02. While its revenue collection though goes up at Rs 12,258 crore, the escrow commitment would also rise at Rs 11,366 crore in 2002-03.

Ironically, the net available (revenue collection minus escrow commitment) for carrying out various expenses will be a paltry Rs 488.94 crore, Rs 591.42 crore, Rs 721.67 crore and Rs 891.41 crore respectively.

MSEB has appealed to the state government to convert debt of Rs 1,986.19 crore into equity and write off its interest payment of Rs 1,069.26 crore in order to provide an escrow accounts especially to the IPPs.

MSEB's existing debt equity ratio is 7:1 and conversion of government loan into equity would enable the former to arrive at a "favourable" debt equity ratio of 7:3. This would enable MSEB to mop up resources from the market "on the strength of its balance sheet."

Maharashtra StateElectricity Board sources said that the debt equity ratio in espect of IPPs has been kept at 70:30 as per the Centre's guidelines. In order to achieve this ratio, MSEB would need to have a total equity of Rs 3,464 crore and hence an additional equity of Rs 1,986 crore would be required to maintain 70:30 ratio.