MSEB to pull plug on defaulter Ispat for Rs 270-cr dues

MUMBAI, DEC 7: In the wake of its decision to withdraw back-up power to Tata Electric Companies (TEC), the Maharashtra State Electricity B...

MUMBAI, DEC 7: In the wake of its decision to withdraw back-up power to Tata Electric Companies (TEC), the Maharashtra State Electricity Board (MSEB) has now taken a tough stance against another business house, the Ispat group, to recover arrears amounting to a whopping Rs 270 crore.

MSEB has decided to issue a 24-hour disconnection notice tomorrow to Ispat Industries unless the company pays up Rs 270 crore for dues outstanding till November 2000.

A top MSEB official told The Indian Express that though several notices of this kind

have been sent earlier, this notice assumes significance as the board chairman Vinay Bansal has put his weight behind the plan to disconnect power supply to the company.

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A recent Nagpur High Court verdict that power connection should be withdrawn for defaulters irrespective of the category they belong to, is said to have influenced the board’s move.

"If the board continues to give power supply to Ispat, it will be a clear case of contempt of court. So we hope this time there will be a solution and undue privileges that the company used to enjoy from past chairmen of the board will no more be possible," confided an MSEB official.

Sources said the company has been defaulting for over an year on a monthly bill of over Rs 35 crore. Though there have been irregular payments for some time this year, an MSEB official said between May and September this year, Ispat had not made any payments. This was the period when Yashwant Bhave was the MSEB chairman. Sources say the company has enjoyed such privileges thanks to certain chairmen.

Ispat Industries consumes over 100 MW of power though several 220 KV lines for its steel plants at Dolvi and Lonikhand near Pune. For its Dolvi plant, the default amounts to around Rs 230 crore and for Lonikhand plant, arrears have crossed Rs 40 crore.

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The undue privileges given to the company was evident from the fact that as soon as Bhave was transferred from MSEB in the first week of November, Ispat rushed to make payments of Rs 35 crore for October.

In September, the board had disconnected power supply for nearly two hours to the loss-making Ispat group at its Dolvi facility in Raigad district for its failure to make full payments for August. The board had also planned to file a case against the group.

Ispat plans to set up a 1,082 MW thermal power plant at Bhadravati in Vidarbha region for which it has already sought escrow cover from MSEB, which will have to shell out more than Rs 2,400 crore on account of this annually.