NEEPCO regrets being compelled to continue regulation of power supply to MePDC

by Psu Connect
Date: 22-03-21

New Delhi: It is for general information that NEEPCO regrets being compelled to continue regulation of power supply to MePDCL in the absence of a specific payment plan for liquidation of the remaining dues payable to NEEPCO as required by the recent instructions of 18th March 2021 of the Ministry of Power, Government of India.

The circumstances detailed below to invoke provisions of the Central Electricity Regulatory Commission (Regulation of Power Supply) Regulations, 2010 to regulate supply of power from its power stations to MePDCL with effect from 00: 00 hrs. of 20th March, 2021:

1. The accumulated outstanding dues, including accrued Late Payment Surcharge, payable by MePDCL to NEEPCO against purchase of power stands at Rs. 369.26 crore, as a result of which the Corporation has been facing extreme financial stress for a long period and is unable to meet the routine expenditures for operation and maintenance of its power stations, including payments towards purchase of gas for the thermal stations. The Corporation has been compelled to borrow fund from the market at exorbitant cost landing it in a debt trap.

2. The Government of India had formulated the Liquidity Infusion Scheme under Atmanirbhar Bharat Abhiyan to enable the distribution companies to liquidate their dues to the central generating companies and transmission companies. Under this scheme the REC Limited and Power Finance Corporation Limited have extended a Special Long Term Transition Loan of Rs. 1345.72 crore to MePDCL to liquidate its dues. If availed, this scheme would enable MePDCL to save in excess of Rs. 100 crore on account of the reduced rate of Late Payment Surcharge payable to NEEPCO on the overdue payments.

3. MePDCL cleared dues of Rs. 325.98 crore of NEEPCO through this loan in two instalments paid January 2021 and March 2021. Thereafter, till date no further payment has been made to NEEPCO towards liquidation of the balance outstanding of Rs. 369.26 crore, while NEEPCO continues to suffer acute financial crisis.

4. Therefore, after exhausting all efforts by NEEPCO to persuade MePDCL to clear the balance outstanding having failed, there was no other option left but to invoke the provisions of the above mentioned regulations to regulate supply of power to Meghalaya.

5. Thereafter, as an outcome of protracted negotiations, MePDCL conceded to NEEPCO’s request and assured to pay the remaining dues in three equal monthly instalments commencing April 2021 and ending in June 2021. In consideration of this assurance NEEPCO withdrew the regulation of power supply to MePDCL with effect from 14:00 hrs of 23.03.2021. However, in view of the acute financial stress being faced by the Corporation in meeting its operational requirements, NEEPCO will regularly update itself regarding progress being made by MePDCL towards availing the second tranche of the Atmanirbhar Bharat loan for payment of the remaining dues. Further course of action by NEEPCO will be guided by the outcome of such updates.

The inconvenience caused to the general public of Meghalaya on account of this is sincerely regretted.

Executive Director (Commercial)
NEEPCO Ltd., Shillong