Bhubaneswar: The Odisha government provided guarantee for Rs1500 crore to State-owned utility company GRIDCO for its loan raised in 2019-20.
The State cabinet, which met under chairmanship of chief minister Naveen Patnaik, approved on Wednesday a proposal for providing government guarantee of Rs 1500 crore for the loans already availed by GRIDCO during Financial Year 2019-20.
Briefing the cabinet decision, the chief secretary Asit Tripathy said, “Such guarantee will enable GRIDCO to get about 2 percent interest concession from the Banks. This will reduce the financial cost of GRIDCO; and in turn the retail tariff for industries, MSMEs & general consumers shall be lower. Also, the loan raised with the guarantee of Government has helped GRIDCO to procure and supply power un-interruptedly to households, MSMEs & various institutions during the year.”
GRIDCO is supplying power to four distribution companies of the State at the bulk supply price (BSP) determined by OERC. OERC has not increased the BSP in proportion to increase in Average Cost of Supply (ACS) by the generators. The BSP has remained almost constant during past 7 years.
Odisha Regulatory Commission (OERC) while approving the Bulk Supply Price (BSP) for the Financial Year 2019-20 has not allowed some fixed charges and financial costs to keep the Bulk Supply Price low. The revenue from sale of power to DISCOMs during Financial Year 2019-20 as approved by OERC was not adequate to meet the power purchase cost and financing cost. Unless GRIDCO pays the power dues in time to the generators such as NTPC, the generators shall curtail supply leading to load shedding.
In order to overcome the above situation and to ensure uninterrupted power supply to the consumers, State Government has been providing Guarantee for enabling GRIDCO to avail term loans from time to time.
Without such guarantee GRIDCO would find it difficult to raise the loan too. The loans are regularly serviced by GRIDCO. In the meantime, GRIDCO has paid back loan of Rs.3,608.OO Crore and surrendered Government guarantee to that extent.
Today, Cabinet approved a proposal for providing Government Guarantee of Rs. 1500.00 Crore for the loans already availed by GRIDCO during Financial Year 2019-20.
Such guarantee will enable GRIDCO to get about 2 percent interest concession from the Banks. This will reduce the financial cost of GRIDCO; and in turn the retail tariff for industries, MSMEs & general consumers shall be lower. Also, the loan raised with the guarantee of Government has helped GRIDCO to procure and supply power un-interruptedly to households, MSMEs & various institutions during the year.
