Its All About Power Sector

Tamil Nadu:Discoms have already issued bond for 100% of the required amount to 24 Bankers and restructuring has also been completed. Bankers have also agreed to sanction 70% of operational losses of 2012-13 and balance 30% losses will be sanctioned by end of July 2013. State Government is taking over the liability by issuing special security in a period of 2 years instead of the maximum time allowed i.e. 5 years and the first year phasing is likely to be completed in July. Phasing for 2013-14 will be INR 3000 Crore and for 2014-15 INR 3300 Crore. Tariff increase for 2012-13 is 37% and for 2013-14, increase is 4%. Tamil Nadu Discom has informed that prepaid meters may not be required as they do not have any outstanding energy bills; State governments as well as large consumers are making payments in a timely manner. Tamil Nadu Discoms have low AT&C losses, therefore, involvement of private participation may not be required. However, the matter has been discussed with State government. Ministry of Power has suggested that option of private participation in some towns or rural areas having higher AT&C losses may be explored. Tamil Nadu Discom informed that UCO bank has sanctioned only INR 185.15 Crore out of their share of INR 610 Crore in 70% cash loss funding due to exposure norms constraint.

Uttar Pradesh: FRP was finalized and bankers have verified it independently. It informed that bonds have not yet been issued as bonds could be issued only after all bankers agree to it. However, they are absolutely ready for it. Dena Bank & State Bank of India have not yet submitted the proposal to their head office & exposure limit of Allahabad Bank has been exhausted. A meeting of consortium of all bankers is being organized on 10th July to resolve the issue. MoP has asked DFS to take up the issue with Banks and requested that a suitable mechanism may be introduced to address such common issues. UP Government has informed that bonds are likely to be issued to bankers by end of July 2013. However, PFC & REC are not willing to take the bonds. The State Government also informed that out of total loan (INR 7844 Crore) sanctioned against operational losses, INR 1000 Crore has been disbursed by bankers. Tariff increase for 2012-13 is 20%, and for 2013-14 it's 9%. State Government will take over bonds amounting to INR 3500 Crore in 2013-14.

Rajasthan: Earlier banks had lot of issues with regard to FRP but now bankers have agreed to it. However, except PNB no bank has yet sanctioned any amount. Rajasthan Government further informed that out of total 36, banks 9 banks have not yet sent the proposal to their head offices. Bonds are likely to be issued by end of July 2013 after banks convey their approval. State Government has given phasing of INR 3000 Crore 4500 Crore and 5700 Crore for the year 2013-14, 2014-15 & 2015-16 respectively for taking over bonds. Tariff increase for 11-12, 12-13 & 13-14 is 23%, 18.5% and 13.6% respectively.

Haryana: Banks are charging higher interest on account of NPV protection on amount restructured prior to introduction of FRP scheme. The Bonds will be issued by end of September 2013. Tariff increase for 10-11, 12-13 and 13-14 is 4%, 16% and 13% respectively. Operational losses funding required for 2012-13, 2013-14 & 2015-16 is INR 3000 Crore, 3209 Crore and 3467 Crore respectively. The amount of funding of operational losses projected was increasing, which is against the spirit of FRP, this requires detailed examination by the State Government

Himachal Pradesh: UCO bank was appointed as Nodal Bank for FRP. However, UCO bank has no exposure in HP Discoms; therefore UCO bank advised to appoint SBI as nodal banker, the request is pending with DFS. Due to this problem, banks have yet to respond. Tariff increase for 2011-12, 2012-131 2013-14 is 9%, 12% and 13% respectively. HP government informed that they have not yet finalized their accounts & it will take time beyond 31st July 2013.

Meghalaya: Has responded to FRP very late & they got nodal bank appointed in June 2013 only. Therefore, the matter is now being taken up with the banks. Tariff increase for 10-11, 11-12, 12-13 and 13-14 is 7%, 1%, 15% and 7% respectively. Accounts of 10-11 & 11-12 are yet to be finalized.

Andhra Pradesh: Discom's have huge Short term loans however books do not have corresponding accumulated losses due to their accounting policies of booking irrecoverable trade receivables in revenue. However auditors have qualified their books on this issue. Credit rating agencies like ICRA and CRISIL have also given lower rating considering the huge trade receivables.

Karnataka: Has similar problem as in case of Andhra Pradesh. State Government has not yet given consent to FRP.

Bihar: Electricity board has been unbundled after 31.03.2012. Transfer notification has been issued and transfer of assets has also been completed. The State government has conveyed that it is ready to abide by all conditions. MoP has stated that losses & liabilities of distribution business only be considered and AG certification will be required in this regard. The Government of Bihar assured that they will furnish details of distribution business losses certified by AG in two weeks. It has also informed that Canara Bank (Nodal Bank) has given in principle approval to FRP. Tariff increase for 11-12, 12-13, 13-14 is 19%, 12% and 6.9% respectively.

Jharkhand: Jharkhand could not un-bundle as on 31.03.2012 due to Supreme Court's Stay. The Stay has been vacated and they have taken up the unbundling process & transfer notification is likely to be issued by 15th July 2013 & they have no STL outstanding to Banks. The State government has informed that they have outstanding energy bills of INR 148 Crore which have been agreed by State Government and payment of INR 50 Crore has already been received. The government has been asked to release the balance amount before 31st July 2013. Jharkhand had no dues with Banks but it has to pay INR 2300 Crore to DVC & INR 1500 Crore to TVNC. Tariff increase for 10-11, 11-12 & 12-13 is 18%, 16% and 16% respectively.

Kerala: State Government decided to form strategic business units instead of unbundling into separate companies. MoP has clarified that FRP scheme cannot be taken up without fulfillment of mandatory conditions, particularly, unbundling of the State Power Utility.

Source: Cerebral Business Research Pvt. Ltd.