DVC bleeds as Jharkhand dues touch Rs 5,000 crore

Has Rs 24k-cr project funding debt,Rs 2,200-cr working capital loan

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Jharkhand State Electricity Boards (JSEB) Rs 5,000-crore arrears to Damodar Valley Corporation (DVC) has started hitting the latters cash flow,forcing DVC to source working capital through high-cost short-term loans.

Indias second largest power utility,the 4,857-MW capacity DVC supplies 250 MW to Jharkhand from its 1,000 MW Durgapur Steel Thermal Power Plant. This costs JSEB about Rs 145 crore per month. But JSEB has been paying a little more than half the bill every month,accumulating dues of Rs 5,000 crore including a delayed payment surcharge in the last three years.

DVC chairman RN Sen said the dues have started impacting the cash flow of the company since Jharkhand accounts for more than 20 per cent of DVCs power sales revenues pegged at Rs 700 crore per month. JSEBs growing dues results in a mismatch between the net sales figure and the actual realisation,which is impacting the bottomline,admitted TK Gupta,DVCs director,finance.

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DVC a three-way venture of the central,Jharkhand and West Bengal governments is already creaking under its Rs 24,000-crore project funding debt. It has borrowed Rs 2,200 crore for working capital,for which debt servicing starts this month.

Gupta said the repayment terms are on an incremental basis,adding the working capital loan will cost the company Rs 100 crore in September,and grow to Rs 600 crore by December (including interest and principal amount).

But DVC is finding it tough to raise short-term working capital loans too since banks consider the Rs 5,000-crore dues as non-recoverable,Sen said. Jharkhand is scheduled to get another 650 MW from upcoming DVC units but the company has asked for a government guarantee against the power purchase agreement that has to be signed.

Sources in JSEB said Jharkhand has initiated unbundling or restructuring of its board. However,before it is done,it must clear its books of accounts clearing all dues. There is a possibility that the Centre may ask DVC to waive the Jharkhand dues but Gupta said that will hit the companys bottomline.