SHILLONG, June 8: Facing a barrage of criticisms over the likely outsourcing of two MeECL distribution circles, the state government on Tuesday said it is examining the feasibility of proposing itself as the guarantor of the Rs 1,345-crore Atmanirbhar loan to the MeECL.
“The Finance Department is examining the matter and we will take a call in the best interests of MeECL and the state government,” Chief Minister Conrad K. Sangma said after a meeting with Power Minister James P.K. Sangma and MeECL Chairman-Managing Director Arunkumar Kembhavi.
The Finance Department’s nod to full budgetary provision would come with a rider – the MeECL has to agree to certain terms and conditions to improve its overall efficiency.
The Chief Minister said when the Finance Department was approached to act as the guarantor for the loan, it was decided that the state government and the department should not take the entire burden of the loan and that the MeECL has to shoulder some responsibility.
“Hence, the Finance Department proposed that at least 25% of this loan amount should be repaid in some other way by the MeECL,” he said. It was then that the REC proposed that certain distribution circles can be outsourced to them, he added.
Earlier, the Power Minister urged the CM to take a fresh look at the proposal to outsource the two distribution circles of MeECL to REC Power Distribution Company Limited (RECPDCL) and instead go for 100% budgetary provision and state guarantee.
The Power Minister said he had impressed upon the CM to consider the fact that MeECL was capable of managing the two circles on its own and the introduction of the distribution franchise (DF) model would only harm the Corporation in the long run.
“The meeting with the CM was very positive. I am hopeful that he would look into this matter before taking a final decision during the Cabinet meeting on Wednesday,” Sangma said.
James observed that MePDCL has been facing a range of issues due to the quantum of outstanding dues towards the central power generating stations and central power generating companies.
“As of March 2020, the total outstanding was Rs 1,345-crore inclusive of delayed payment surcharge of 18%. Meghalaya is the highest defaulter among the Northeastern states,” he said.
James also added that when the Atmanirbhar loan was offered at a 9.5% rate of interest, the government saw it as an opportunity to clear the outstanding dues, especially since the generating companies were regulating the power supply at a time when examinations were going on.
“We had opposed the proposal of DF when it was mooted as a condition for repayment of the loan,” Sangma said.
“I have discussed this matter with the MeECL engineers and they have assured their complete support for a turnaround of the MeECL,” Sangma said, adding that the Corporation should be given a chance to prove itself.
Meanwhile Arunkumar Kembhavi, CMD, MeECL said that the proposal of the DF model was made considering the financial position of the MeECL and the absence of a viable revenue model to repay the loan.
“The annual revenue of MeECL is Rs 900-crore and the loan itself is Rs 1,345-crore. Both Rural Electrification Corporation (REC) and Power Finance Corporation (PFC) felt that MeECL would not be in a position to repay the loan and hence put this additional condition of 25% revenue to be generated by the distribution franchisee. If this goes through, Meghalaya will become the first state to outsource its distribution circles after availing Atmanirbhar loan,” Kembhavi said.
Earlier in the day, Kembhavi held an emergency meeting with the Coordination Committee of Registered MeECL Employees Associations and Unions (CCORMAU) to discuss the DF proposal.
During the meeting the CMD said that the MeECL management had objected to privatisation or distribution franchisee (DF) but the situation at hand was such that the state government decided to outsource two circles to REC, in view of the deadline set by the Ministry of Power for recovery of the Rs 370.99 crore due to NEEPCO directly from the Reserve Bank of India which disburses central grants.
The CMD expressed his desire to take a delegation of the MeECL employees to meet the Power Minister and Chief Minister to urge the state government to give 100% budgetary guarantee for the Rs 1,345 Atmanirbhar loan, and in return MeECL would adhere to strict targets, if any, to be set forth by the higher authorities.
