Government to stand guarantee for Gridco Loan

BHUBANESWAR: The State Government will stand guarantee for another loan of ` 1,000 crore for Gridco to tide over the cash deficit position of the bulk power supply utility. This was decided at the State Cabinet meeting chaired by Chief Minister Naveen Patnaik here on Saturday. The fresh guarantee will cover both principal and interest as a special dispensation, official sources said. This is the third consecutive year, the Government stood as a guarantor for Gridco to facilitate credit mobilisation for the utility which is under tremendous financial stress. The Government provided guarantee for a loan of similar amount in 2009-10 and 2010-11.  The liquidity position of the State utility has gone from bad to worse due to purchase of costly thermal power from NTPC and other sources to  meet the power crisis situation in the State. Presently, the State is facing a shortfall of 800 MW of power due to low hydro power generation. Water availability in major reservoirs located in southern Orissa is around 30 per cent of their capacity and  this has resulted in inadequate generation of hydro power. The expected shortage of power from the hydro generating stations will be to the tune of 1600 million unit. While Gridco was purchasing hydro power at 65 paise per unit from the State-run Orissa Hydro Power Corporation, the utility is now buying thermal power at more than ` 3.5 per unit. The differential cost at the end of the water year will be around ` 600 crore, the Cabinet memorandum of the department reportedly said. Hike in the fuel (coal) cost after the announcement of the bulk supply tariff by the Orissa Electricity Regulatory Commission has further impacted the financial condition of the beleaguered utility. The additional fuel cost for the current fiscal has been estimated at ` 400 crore. The regulator has left a revenue gap of ` 746 crore at the time of approving the annual revenue requirement of Gridco which has estimated its total annual shortfall will be to the tune of ` 1,983 crore. As a number of independent power projects (IPPs), including ultra-mega power plants, are coming up in the State and some of them are likely to be commissioned by the end of next year, the Energy Department is hopeful that the State will be power surplus by 2013-14.