Release compensation of Rs 108.84 cr to MSEDCL, MERC to State Govt
| Date :31-Jan-2023 |
Staff Reporter
The 12-hour day time power supply to five districts of Eastern Vidarbha could prove to be a costly proposition for Maharashtra State Electricity Distribution Company Limited (MSEDCL), as in case State Government fails to pay the subsidy amount, it is around Rs 108.84 crore, interest on due amount would be deducted from its working capital. Maharashtra Electricity Regulatory Commission (MERC), while approving MSEDCL petition seeking alterations in load-shedding timing, noted that, in past also, State Government had promised to reimburse later for undertaking the deviation, but failed to do so.
So, the Regulator added the past dues of Rs 48.50 crore with State and current expected cost of Rs 60.34 crore, and directed State Government to compensate MSEDCL within two months of the order. In case, State defaults on payment of Rs 108.84 crore, then MERC said, the interest accruing on the overdue payment, Rs 10.67 crore, would be deducted from the working capital of MSEDCL for the financial year 2022-23.
In its reasoning, the full bench of MERC comprising Sanjay Kumar, Chairperson, I M Bohari and Mukesh Khullar, both Members, inferred that due to such decisions, which they said are against the mandate of Indian Electricity Act, it puts burden on the finances of MSEDCL as it has to arrange extra working capital to meet such last minute rise in expenses. So in no case, the MSEDCL will shift the burden to consumers in general.
The Commission granted two-months time from the date of order, it was passed on January 12, 2023, for State Government to compensate MSEDCL. The deduction from working expenses would have adverse impact on tariff revision for MSEDCL, as it may not be in position to justify its expenses in totality. This would further strain the finances of the company, as it may not be able to fully recover the power purchase cost due to deduction in working capital. Giving the reasoning, MERC said that, State neither makes budgetary provision nor provides advance subsidy to MSEDCL and this results in burdening the distribution company as it suffers losses. Such last minute decision on changing load shedding protocol in agriculture sector only worsens the already precarious financial position of MSEDCL, the MERC noted further.
The State-run MSEDCL approached MERC in December seeking permission to provide 12-hour day time power supply in five districts, Nagpur, Bhandara, Gondia, Chandrapur and Gadchiroli that is affected by man-animal conflict issues. State Government proposed providing day time power supply of 12-hours for two months, till January 31, 2023, so that farmers can irrigate their field in day time and avoid going to farms during night time when maximum attacks by wild animals tend to occur.
MERC’s decision stems from the fact that, previously also, MSEDCL, while adhering to State’s request, had altered load shedding timings on four occasions. The first was from 10/08/2018 to 15/12/2018 and during this period, amount due to power supply to Nagpur, Bhandara, Gondia, Gadchiroli, Chandrapur and Wardha districts is Rs 43.80 crore. The second instance when State requested MSEDCL to go for day time power supply was from 02/11/2018 to 30/11/2018 and 06/12/2018 to 20/12/2018 for districts of Chandrapur and Gadchiroli districts and Pandharkawda and Ralegaon sub-divisions and due amount is Rs 2.25 crore. Thereafter, from December 2020 to May 31, 2021, areas of Kurkheda tehsil were covered and amount due is Rs 2.45 crore.
MERC also rejected MSEDCL’s contention wherein the company said it would levy additional proportionate tariff on unmetered AG consumers, saying this is first time company is seeking permission to introduce the clause. In previous instances, the distribution company had not prayed for such increase in tariff saying such unilateral permission cannot be granted.