RBI may undertake debt restructuring of state-run DVC soon

The Reserve Bank of India (RBI) may soon go for a debt recast of the Damodar Valley Corporation (DVC), the three way venture of the West Bengal, Jharkhand and Union governments which is reeling under pressure with excess capacity lying idle for lack of power purchase agreements.

DVC chairman Andrew WK Langstieh said DVC has R30,000 crore worth of debt for which it has to fork out R1,200 crore every year. On the other hand, out of its total 6,300 MW capacity, 1,500 MW is lying idle for lack of power purchase agreements (PPAs). Besides the Delhi government wants to surrender 2,500 MW of power of which 400 MW of DVC supplies will be surrendered.

“Given this situation, we have approached for a debt restructure through the RBI window, which can substitute costly loans with cheaper loans,” Langstieh said.

DVC had aimed at becoming a 10,000 MW company and with the 3,200 MW Raghunathpur project coming up above its present generation capacity of 6,300 MW it would meet its target but without any avenues to sell power. “There have been no PPAs in the last one year and every one has been making short-term power purchases from the exchanges,” Langstieh said adding that the company expected the power market to get rectified in another one- two years.

The company was now relying on R3,960 crore worth of additional revenue generation from increased tariff, which along with the debt recast would put the company’s finances into a better position. While R3,600 crore per annum would come from evacuating 700 MW of power to southern states, R360 crore a year would come from increased tariff in West Bengal.While the company was burdened with huge debts, it has unrealised dues from Jharkhand amounting to R4,300 crore excluding delayed payment surcharge. Jharkhand, Langstieh said, has started paying its current bills. The company and state has started working on a package so that all dues were liquidated at the earliest. But the package would require the Centre’s nod, the chairman said.

The statutory power generator, which incurred a loss of R1,050 crore on a turnover of R11,500 crore in FY 14, has set up a marketing team for selling power.

”We are fighting to sell power and have been able to push a 75 MW PPA with the Assam government, which is a success in itself for the first kind of initiative.