Shillong: The Meghalaya Cabinet on Wednesday approved to provide 100 per cent budgetary support to the Meghalaya Energy Corporation Limited (MeECL) for repaying the Rs 1,345 crore ‘Atma Nirbhar’ loan, provided that certain targets are phase-wise met.
The cabinet took this decision based on the request and assurance given by the power department and MeECL management to initiate fiscal reforms in the cash-strapped corporation.
There was also strong opposition from several quarters, including cabinet ministers and opposition Congress against the move to lease out the distribution circles of the MeECL to the Rural Electrification Corporation Power Distribution Company (REC PDCL) for a period of 25 years.
The MeECL is trying to clear some of the outstanding bills it owes to central power distribution companies, such the NEEPCO and the NTPC and others through the ‘Atma Nirbhar’ loan
“We decided that we will be giving a chance to the MeECL and to the power department with 100 percent budgetary support for the ‘Atma Nirbhar’, loan but this support will come along with certain targets that need to be met in a time-bound manner,” Chief Minister Conrad K Sangma told reporters after the meeting.
“The other condition being put in was that there has to be some kind of a security in terms of mortgage of MeECL assets to the government of Meghalaya to ensure that there is safety and security for the state government also,” he said.
The Finance and Power departments have been asked to work out details of the different targets which the MeECL has to achieve, he said, adding that the REC and Power Finance Corporation Ltd (PFC) would be informed that 100 percent budgetary support will be given by the state government
The power department also spelt out measures to reduce the aggregate technical and commercial (AT&C) losses, the Chief Minister said, adding that the MeECL employees, including engineers have undertaken to ensure that different targets set for the corporation would be met with.
The ‘Atma Nirbhar’ was availed by the MeECL in order to pay the outstanding dues amounting to Rs 1,345 crore to all the power generation companies, which has been pending for the past 10 years.
The REC and PFC had put conditions on the government of Meghalaya and MeECL while disbursing the loan.
“We have received the first tranche of the loan and before releasing the second tranche which again is Rs 600 crore plus, the REC and PFC have stressed on two options,” the Chief Minister said.
“The first option is that government of Meghalaya give full budgetary support for the repayment of this loan along with interest which will amount to close to Rs 2,000 crore in the next 10 years or give a partial budgetary support along with certain restructuring within the MeECL which would be in the form of giving Distribution Franchisees (DFs) to REC and PFC,” Sangma spelt out and maintained that there was no risk for the state government in giving full budgetary support to MeECL.
Stating that there is no risk for the state government in giving full budgetary support to MeECL, the Chief Minister said, “As I said government has anyway decided to give budgetary provision of 75 percent which comes to around Rs. 1,600 crore in the next 10 years, 25 per cent would mean another Rs. 560 crore – now, the important thing to note is if MeECL pays, then it does not comes on the state government but if MeECL is not able to pay then the state government will have to pay.”
Sangma, who also handles the Finance portfolio, further informed that roughly the annual amount which has to be kept by the state government may come up to Rs 150 – Rs 200 crore as budgetary provision for repayment of the loan.
On concerns of “Distribution Franchise” (DF) being raised by different section, the Chief Minister informed that the power department led by the power minister himself and the chairman of MeECL have shown different aspects of power and also different steps that they will take to ensure that the reforms take place to achieve the overall revenue that is expected and also to reduce the Aggregate Technical & Commercial (AT&C) losses if given a chance, and stressed that the distribution franchises (DFs) option should not be taken.
He, however, said that a large number of DF are there across the State for quite some time and it was not a new concept.
A large number of them are there in Garo Hills, some are there in Khasi Hills and some are there in Jaintia Hills also, so across the state, the DFs have been there for quite some time, it is not a new concept,” the Chief Minister said.