Northeast News – Fate of MeECL to be decided next week

by Guwahati_City

Shillong, June 4: The Meghalaya Democratic Alliance government will take a final call on whether to take responsibility for payment of the over Rs 1,345 crore loan for the MeECL or hand over the management of some of the distribution circles to the Rural Electrification Corporation Power Distribution Company (REC PDCL) by next week.
“The state Cabinet will again sit on Wednesday to take a final call on the matter after examining all aspects,” Chief Minister Conrad K Sangma informed after chairing a cabinet meeting today.
“We will take a decision on whether it will be appropriate for the state government to take the entire burden of the loan and pay to bail out MeECL or do we look at a system where we allow some professionalism coming in without harming the structure of MeECL, without harming the employees,” he added.
This also came a day after seven MLAs from Jaintia Hills region have expressed their strong opposition against the government’s move to privatize the Meghalaya Energy Corporation Limited (MeECL) by outsourcing the distribution circles to companies from outside the state.
Stating that it is a crucial issue, Sangma said the state Cabinet will spend the next four-five days looking at all options that are there and take all stakeholders on board for discussion to improve the efficiency of the MeECL.
“The question is about Rs 560 crore of revenue that the government of Meghalaya will have to give additionally to (pay the loan) bail out MeECL,” he said.
Stating that there has been no agreement signed for outsourcing the distribution circles of the MeECL to REC PDCL yet, Sangma said the government is still examining the pros and cons on how to move forward.
He however clarified that the agreement if it is to go forward is only a “management contract” adding “It is not giving out any kind of lease or assets to anybody (as alleged).”
The Chief Minister also informed that initially when the issue was discussed, the power minister James K Sangma and officials from the power department and MeECL have expressed opposition to the idea of going for distribution franchisees (DFs).
“MeECL does not want to give any of its circles, and the power department and power minister don’t want to give any of these circles for DFs they want to run it by themselves,” he said, adding “we have asked the power department to give us all the options that are available.”
Giving the whole background of the issue, chief minister said when the Atma-Nirbhar loan was taken, the REC and PFC required the government of Meghalaya to give a guarantee and put the budget provision for the repayment which means that if MeECL is not in a position to repay the interest and principal amount every month, then REC will be able to deduct that amount from state taxes directly from RBI.
He said however the finance department strongly felt that the state government cannot afford to pay the entire amount of the loan repayment which will be close to Rs 120 crore for the first three years and will jump to Rs 300 crore as the principal amount will come in after the three years.
“Therefore, the finance department objected to this point. We talk to REC and we ask what option we have. Then the REC said there are lots of the circles within MeECL which are having AT&C losses ranging from anything between 30 per cent to 72 per cent. Therefore, REC said if you cannot give us the entire budgetary provision or guarantee the entire loan amount through the state finances then a certain percentage of the distribution franchisees may be outsourced to the REC so that they will run and manage it,” he said.
Following the objection from the power department, chief minister said the finance department has suggested that 75 per cent of the interest and the loan amount will be guaranteed by the government and if there is a default state government will pay but at least 25 per cent of the pressure must be taken by the MeECL in the form of their distribution franchisees.

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