SHILLONG, June 6: Amidst growing opposition to the move to outsource the distribution circles of MeECL to the Rural Electrification Corporation, the Meghalaya Energy Corporation Limited (MeECL) has released a document that provides details of the proposed franchisee model.
The document said the Meghalaya Power Distribution Corporation Limited (MePDCL) had received a proposal from the REC Power Distribution Company Limited (RECPDCL), a wholly-owned subsidiary of the public sector REC Limited for the distribution franchisee (DF) model of operation.
Under the provisions, the RECPDCL is entitled to distribute electricity in a specified area within the supply area of MePDCL according to the provisions of the Indian Electricity Act.
Based on the proposal, a mutually agreed distribution franchisee agreement was drafted and vetted by the different departments of the Meghalaya government, the document said. After execution of the agreement, RECPDCL would become MePDCL’s franchisee for the Central and Eastern distribution circles for the next 25 years.
The document said the problem with input-based distribution franchisee is that DISCOMs in Meghalaya are facing a financial crunch due to a huge gap between income and committed expenditure on account of salary, pension, power purchase and interest on loans availed to execute power projects and to replay power purchase dues.
It pointed out privatisation of the utility will not solve the core issues but focus would be laid on improving efficiency.
The document cited a clause saying the area with 25% of total input has to be handed over to the distribution franchisee.
It said Meghalaya’s total energy input was 1720.21 million units as of March 2021 and the cumulative energy input of the Central and Eastern circles was about 23% of the total energy input.
A total due of Rs 1,345 crore to NEEPCO, NTPC and other energy suppliers put MeECL in the financial crisis. The REC released 50% of the Atmanirbhar loan the state government took to clear the dues.
In view of 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 the 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% 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. This made the REC propose the outsourcing of a certain percentage of MePDCL’s distribution circles.
The MeECL document also revealed that the total AT&C (aggregated technical and commercial) loss in Meghalaya was 26.25% and that in Eastern or Jaintia Hills (Distribution) Circle was 32.27%. The loss in Shillong (D) Circle and Central or Khasi Hills (D) Circle was 15.88% and 33.14% respectively.
A projection has also been made to reduce the loss in DF area of Central Circle to 13% in 2025-2026 from 33% in 2020-21 and of Eastern Circle from 35% in 2020 to 13% in 2025-26.
The MePDCL introduced the DF model in its operational business model in April 2019. Dalu, Phulbari, Mawsynram and Nangalbibra circles are operated through this model. The functional efficiency of these areas is said to have significantly increased after the introduction of the DF model.
A case study of the Dalu area showed that there was a reduction in input units from 23.27 MUs to 17.04 MUs while an increase was seen in the amount billed compared to the pre-takeover period.
The document also showed that breakdown restoration time reduced from eight hours to less than an hour, and power was restored in 12 villages after many months.
The document also underlined reduction in the AT&C losses from 87.0% to 52.68% during the 2019-20 fiscal and further to 26.18% (up to October of 2020-21 fiscal) through continuous effort and methodologies.
