Cracking a whip on beleaguered state-run power sector companies, the government has reduced planned investment by seven such companies including NTPC and Power Grid Corporation by 23 per cent to Rs 43,667.05 crore for FY20, compared with the revised estimate of Rs 56,742.49 crore for the previous financial year.
While Power Grid Corporation is faced with a stiff cut in the investments of nearly 48 per cent to Rs 15,000 crore for FY20 compared with Rs 28,487.53 crore revised estimates for FY19, in the case of NTPC, the investment has been reduced to Rs 20,000 crore from Rs 22,300 crore for FY19. The investments of Power Grid had been budgeted at Rs 25,000 crore for 2018-19, according to the Budget document presented on Friday to Parliament
A huge amount of capital lies locked up in 30-odd debt-laden firms (combined debt estimated above Rs 1.5 lakh crore) with 39,000 MW of production capacity. Annual discom losses in FY16, FY17 and FY18 were also funded via borrowings.
The NDA government, in its first term, has dithered on this by shying away from tough action to force reform at state-owned entities to reduce losses and raise revenues. It also didn’t fully resolve issues surrounding fuel-availability, power-purchase agreements, and promoters’ inability to infuse equity/working capital, while risk-averseness of banks/financial institutions has magnified the problem. However, power is now on the concurrent list of the Constitution and the government is racing against time in order to resolve sectoral issues due to differences between the central and state governments.
The power ministry has proposed a “power sector council” comprising the political executive as well as the energy bureaucracy to tackle issues between the governments as part of the ministry’s 100-day action plan for the second term of the Narendra Modi government.
This also comes in the backdrop of the Central government preparing a roadmap for the power sector.
The ‘Vision Document for Power Sector for the next Five Years’ will also focus on electricity generation utilities, including renewable energy sources, transmission including green energy corridor and green energy integration, and electricity distribution companies (discoms) including distribution franchisees.
According to the Union Budget 2019-20, the total expenditure of the power ministry has been pegged higher at Rs 22,322.27 for this fiscal, compared to the revised estimate of Rs 20,062.19 crore for 2018-19. It was budgeted at Rs 15,769.92 crore for 2018-19.
Capital remains locked in debt-ridden firms
A huge amount of capital lies locked up in 30-odd debt-laden firms with a combined debt estimated above Rs 1.5 lakh crore
Rs 43,667 cr - Revised capex of power sector PSUs in FY2019-20
Rs 56,742 cr - Planned capex of power sector PSUs in FY2019-20
23 per cent fall in planned capex by these firms in FY20