MSEDCL seeks recovery of wrongly credited subsidy of Rs 49.21 cr

 

 

Maharashtra State Electricity Distribution Company Limited (MSEDCL) has served a notice to Wardha’s manufacturer for drawing additional power tariff subsidy to tune of Rs 49.21 crore. Chief Engineer (Commercial), Maharashtra State Electricity Distribution Company Limited, has sought an explanation from Directors of M/s S M W Ispat Pvt Ltd (erstwhile M/s Mahalaxmi TMT Pvt Ltd), stating that they have wrongly claimed the said subsidy. Maharashtra Government since 2017 is providing subsidy in power tariff for industries in D and D+1 industrial areas, basically in backward region of Vidarbha and Marathwada to promote industrilisation. One part of scheme was meant for industries to wean them away from open access and second part pertained to spurring units to reinvest and expand for generating new employment for which additional subsidy was provided.

 

The case pertains to inability of the steel producer to satisfy claim for such massive subsidy. A five day period was given to the industry to submit there say while the notice states that facts by the industry in availing subsidy failed to match with MSEDCL records. The notice was issued on August 26, 2021, and it remains to be see how the issue plays out in future. The details in the notice have explained in details of the tariff subsidy scheme, its ambit wherein industry was offered incentive to encourage them to shift from open access to MSEDCL. Maharashtra Government had floated the scheme in year 2017 and that time there were two components, one of Rs. 1200 crores subsidy in power tariff for regular industry. The second aspect was for those units who expand their existing production and in case their consumption increases substantially post shifting to MSEDCL, then MSEDCL would provide additional concession tariff over and above the regular scheme. For the same, MSEDCL would be compensated by Maharashtra Government from general funds of State. However post 2019 when the tariff subsidy scheme was extended till 2024, an upper cap was instituted by Maharashtra Government to Rs. 1200 crores.

 

Meanwhile, in the case of Wardha based steel unit, the notice mentioned that it was imperative that comparison of increased use of power, it indicates expansion of production, was to be made with previous utilisation based on which the subsidy is calculated. The increased power consumption was to be calculated from load drawn from MSEDCL+consumption from open access and extra usage thereafter was indicative of new investment by the owners. However in the said case of the Wardha unit, only the utilisation of power supplied through MSEDCL was relied upon to calculate the subsidy and the not the one used to be drawn through open access, the notice mentioned. This resulted in depriving benefit of tariff subsidy to other industries who returned to MSEDCL fold from open access scheme. And based on calculation the single steel unit in Wardha benefited to tune of Rs. 49.22 crores that MSEDCL now wants to recover.

 

MSEDCL also concluded in notice to Directors of M/s SMW Inspat Pvt. Ltd. that they have failed to stick to State Government scheme since they did not submit relevant documents relating to new investment, expansion or increase in production or generation of the additional jobs. The previous explanation of the company was also rejected and hence last chance is provided to submit fresh evidence or otherwise they would be liable for action. The industry was asked to submit documents endorsed by Director, Industries.

 

Exhaustion of power tariff subsidy raises eyebrows The matter came to fore when industries in Vidarbha and Marathwada claim for regular power tariff subsidy were returned by MSEDCL, saying entire amount was disbursed. It was a real shocker for the industry captains and hence they dug deep only to learn that some influential units in two regions have pocketed the big chunk of Rs 1200 crore outlay, meant for year 2020-21. Interestingly in the said year, for about three months there was no production owing to COVID-19 enforced lockdown, so the question was how come entire subsidy allocation was exhausted, said the industry insiders not wishing to come on record. Apart from new units, even existing industry benefited by 75 paise/unit subsidy in case they opt for expansion of their business as same was treated as new investment that would boost the employment and in turn aid in prosperity of the backward areas. For the units that expanded their business the subsidy element was in addition to incentive for continuing with production in Vidarbha or Marathwada area.