Chief Minister Conrad K Sangma today said that there has been no agreement signed yet to hand over the Jaintia Distribution Circle to the national public sector undertaking or to any private company.
“This has come to the cabinet. We will review the entire aspect and we will take a decision in the next one week whether it will be appropriate for the state government to take the entire burden of the loan and bail out the MeECL (Meghalaya Energy Corporation Ltd) all the time, which we have been doing quite a number of times or do we look at a system where we allow some professionalism coming in without harming the structure of MeECL and its employees,” Sangma informed reporters.
The Chief Minister said that the cabinet has not decided on which way to go and the government will spend the next four to five days considering all the options.
He also said that all stakeholders will be taken on board before coming to a decision.
He said that if this agreement were to go forward, it will only be a management contract and it is not about giving any lease or assets to anybody.
Sangma also said that, from the beginning, the MeECL and the Power Department and the responsible minister, his brother James, has been completely against going with the proposal of the REC.
“MeECL does not want to give any of its circles. The Power Department and Power Minister don’t want to give any of the circles to a distribution franchisee. They want to run it themselves,” the CM said.
Clarifying on the matter, Sangma informed that after the state government took Rs 1,345 crore as a loan from the REC last year to clear the dues pending with the various generation companies, the REC and the PFC required the government of Meghalaya to give a guarantee and give a budgetary provision for the repayment for MeECL in the state’s budget, which means that if the MeECL is not in a position to repay the interest and the principal amount every month, then REC will be able to deduct that amount from our taxes directly from RBI.
“REC wanted Meghalaya government to do the entire 100 percent of the repayment to be put in the budgetary proposal and put into the finance head so that the payments would be made to REC,” the Chief Minister said.
Sangma said that the Finance Department strongly felt that the government cannot afford to pay the entire amount of the loan, which will be close to Rs 120 crore for the first three years and will jump to Rs 300 crores because the principal amount will come in after three years.
“We talked to REC and asked what is the option that we have and then the REC said that there are a lot of circles within the MeECL which are having AT and C losses ranging anything between 30 percent to 72 percent. Therefore REC said that if you cannot give us the entire budgetary provision of guarantee the entire loan amount through the state’s finances then a certain percentage of the distribution franchisees maybe outsourced to the REC so that they will run and manage it,” the Chief Minister said.
Sangma also said that the Finance Department felt that it needed to ensure that the MeECL also improves its overall efficiency.
“For many years many circles have been running at 70 percent, 50 percent, 30 percent AT and C losses. So therefore, while we take this loan and the state government is supporting MeECL at least 25 percent of the pressure must be on MeECL why should Meghalaya government bailout MeECL all the time,” he added.
Sangma informed that with that objective in mind, the Finance Department suggested that 75 percent of the interest and the loan amount will be guaranteed by the state government and if there is a default state government will pay, but at least 25 percent of that pressure must be taken by the MeECL in the form of their distribution franchisees.
Giving a rough estimate, Sangma said that if 25 percent of the distribution franchisee do not go to REC, that will put another Rs 560 crores burden on the state government.
Sangma also assured that nobody will be laid off from their jobs.
“There will only be a complete revamp of the overall staff so that efficiency can be improved and increase the manpower, wherever it is less. There will also be a large amount of professionalism that will come in and to a large extent there will be competition to improve the distribution franchisees in the long-run,” the Chief Minister said, adding that the REC will have to guarantee a minimum revenue to the state, which will be more than the current collection.
