Mumbai (Maharashtra) [India], July 2 (ANI): Maharashtra Energy Minister Dr Nitin Raut on Thursday urged the Union Ministry of Power to provide a grant of Rs 10,000 crore to Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) to tide over the liquidity crunch caused by COVID-19 crisis.
In a letter sent today to Union Minister RK Singh, Raut informed that MSEDCL incurred huge financial losses due to COVID-19 pandemic.
Raut said that due to COVID-19, MSEDCL was grappling with acute fund shortage. The lockdown period continued for almost three months and it still continued in major parts of Maharashtra, he stated.
He has pointed out that during the lockdown period industrial and commercial consumption reached to the bottom. The industrial and commercial consumption which amounted 60 per cent of the revenue could not get realised during the period which put MSEDCL in a precarious financial condition.
The industrial and commercial consumption was the main source of providing subsidized rates to domestic and agriculture consumers, drop in its sale added to the financial woes of MSEDCL as the domestic and agriculture consumption continued unabated. Rather domestic consumption showed rising trend during the summer due to heat and work from home, he added.
"Almost all of the industrial and commercial consumption stopped during lockdown period. All the consumers were given time extension to pay their electricity bills. Thus, the realization of revenue almost halted in April and May; whereas, the power purchase costs (mainly Fixed), staff salaries, tax liability were not reduced. As a result, MSEDCL was facing unprecedented Cash Crunch and it's been extremely difficult to clear the payments of power generators, since April 2020," he informed and added that subsequently, it's cascading effects would last for the next few months and may continue throughout the year.
"The financial condition of the general public, small scale industries and small shops had been deteriorated in lockdown period, and would take some time to recover. With the lower realization of revenue, it would be difficult for MSEDCL to make both ends meet... Moreover, MSEDCL had approached different Banks, financial institutions for assistance but, they had not responded positively," he said.
In past few years, delayed tariff approvals by Maharashtra Electricity Regulatory Commission (MERC) and inadequacy of tariff adversely affected the liquidity position of MSEDCL. Due to cash constraint, MSEDCL was compelled to defer several payment obligations including State Gencos, Transcos and IPPs towards power purchase. This resulted into accumulation of outstanding payments towards procurement of power, Raut said. (ANI)