The Odisha Cabinet has approved a proposal to provide government guarantee for Rs 1500 crore loans already availed by the state-owned bulk power purchaser and trader Gridco during 2019-20.
The guarantee will enable Gridco to avail about two per cent interest concession from banks. This will reduce the financial cost for Gridco and lower the retail electricity tariff for industries, MSMEs and LT consumers.
That apart, the loan raised with the guarantee of the government has helped Gridco to procure and supply power uninterruptedly to households, MSMEs and various institutions during the year.
Gridco has been supplying power to the four power distribution companies (discoms) of the state at Bulk Supply Price (BSP) determined by state regulator Odisha Electricity Regulatory Commission (OERC).
The power regulator has not increased BSP commensurate with the rise in the Average Cost of Supply (ACS) by the generators. The BSP has remained almost constant for the past seven years.
While approving the BSP for 2019-20, OERC has not allowed some fixed charges and financial costs to keep the BSP low. The revenue from the sale of power to discoms during 2019-20 as approved by OERC was not adequate to meet the power purchase cost and financing cost. Unless Gridco pays the power dues in time to the generators such as NTPC, the generators shall curtail supply, leading to load shedding.
In order to overcome the above situation and ensure uninterrupted power supply to the consumers, the state government has been providing a guarantee for enabling Gridco to avail term loans from time to time.
Without such a guarantee, Gridco would find it difficult to raise loans. These loans are regularly serviced by Gridco. In the meantime, Gridco had paid back loans of Rs 3608 crore and surrendered government guarantee to that extent.
Article Written By Dibyajit Sahu
Image Source: Google