Bhubaneswar: Gridco, the State owned bulk power supplier in Odisha Thursday got a guarantee cover for Rs 2,600 crore from the State government. This would enable the utility company to borrow from the market.

The State cabinet which met under the chairmanship of chief minister Naveen Patnaik on Thursday approved the guarantee proposal

Briefing the cabinet decision, the chief secretary Asit Tripathy said, “Today, Cabinet approved a proposal for providing government Guarantee of Rs.2600.00 Crore for the loans to be availed by Gridco during Financial Year 2020-21.”

“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.”

Gridco is supplying power to four distribution companies of the State at the bulk supply price (BSP) determined by OERC. BSP has not kept pace with the Average Cost of Supply (ACS) by the generators.

The revenue of GRIDCO from sale of power to DISCOMs during Financial Year 2020-21 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.”