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State power company wants govt to take over 75 % of its debt

At a time when the state government’s coffers are under severe pressure, the state electricity distribution company has sent a proposal to the Maharashtra government to take over 75 per cent of its debt under a central scheme to relieve state electricity retailers of financial stress.

The Maharashtra State Electricity Distribution Company Ltd (MSEDCL) has a debt of about Rs21,000 crore, of which Rs 13,000 crore is in the form of long-term loans. Rs8,000 crore is in the form of short-term loans. The power distribution company supplies electricity to 2.2 crore consumers across the state. Maharashtra’s latest economic survey report says the state already has a debt of 3.33 lakh crore on its books.

Under the scheme, ‘Ujwal Discom Assurance Yojana’ (UDAY), state governments across the country can opt to assume up to 75 percent of the state electricity distributors’ debt and issue sovereign bonds to raise capital, which distribution companies will use to pay down debt. The scheme, launched in November last year, is aimed at improving the overall financial and operational efficiency of ailing state power distribution companies across the country.

So far, at least 14 states have signed up for the UDAY scheme, namely, Jharkhand, Chhatisgarh, Rajasthan, Uttar Pradesh, Gujarat, Bihar, Punjab, Jammu & Kashmir, Haryana, Uttarakhand, Goa, Karnataka, Manipur and Andhra Pradesh.