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CM in bother over MLAs’ stand on MeECL reforms

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SHILLONG, June 4: The ruling MDA coalition is in a catch-22 situation over political fallout of the move for reforming the debt-trapped Meghalaya Energy Corporation Limited (MeECL). On one hand, there is pressing need to bail out MeECL and, on the other, keeping coalition partners in good humour.
All ruling MLAs from Jaintia Hills, including two cabinet ministers, have united against any move to privatise or outsource the wings or distribution circles of the MeECL, giving chief minister Conrad K. Sangma another unlikely source of bother.
All seven legislators of the Jaintia Hills region have unanimously opposed the proposal to hand over the operation of the Jaintia Hills Distribution Circle of the MeECL to private companies. The MLAs of the East Khasi Hills region seem to be on the same page.
The cash-strapped Meghalaya government is expected to take a decision on the proposed privatisation in the Cabinet meeting scheduled for coming Wednesday.
Clarifying on the matter Friday, chief minister explained the state owes Rs. 1,340-crore to NEEPCO, NTPC and other agencies.
The state government took the Atmanirbhar loan to clear the dues and the Rural Electrification Corporation released the first tranche of 50 per cent. Looking at the huge amount, the REC and Power Finance Corporation asked the Meghalaya government to give a guarantee for the second tranche and include provisions of repayment for MeECL in the state’s budget.
The condition was imposed so that the interest and principal amount could be deducted from the state’s own taxes directly from the Reserve Bank of India if MeECL was not in a position to repay.
The REC wanted the state government to put 100 per cent repayment in the budgetary proposal.
The Finance department opposed this as it felt the government could not afford to repay the entire loan amount that would be close to Rs. 120-crore annually for three years and jump to about Rs. 300-crore after three years.
“There are a lot of challenges within several circles of MeECL where the loss is 30-70 per cent. We were told that if Meghalaya cannot give budgetary provision through state finances, a certain percentage of distribution franchise may be outsourced to the REC,” Sangma said.
Both MeECL and the Power department have opposed this proposal, maintaining that the state government should guarantee the entire amount and include it in the budget.
“The amount is huge and will come to more than Rs. 2,000-crore in 10 years,” the Chief Minister said.
The Finance department also noted that MeECL needs to improve its efficiency as many circles have run up huge losses. The department also said MeECL should absorb at least 25 per cent of the fiscal pressure.
“Why should the Meghalaya government bail out MeECL every time?” Sangma said. He added that the Finance department also advised the government to guarantee 75 per cent of the interest and loan amount in case of default.
The chief minister said the Cabinet will look into the pros and cons before taking any decision. He assured that the MeECL employees will not be removed if the outsourcing idea is given the nod.

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