REL’s flouts norms, government mute spectator

Published: 03rd October 2012 12:55 PM  |   Last Updated: 03rd October 2012 12:55 PM   |  A+A-

Even as the Reliance Energy Limited (REL)-managed distribution companies have been flouting all the agreements, silence of the State Government has baffled many.

 In a memorandum to Chief Secretary BK Patnaik, trade union leader and Nikhila Odisha Bidyut Shramik Mahasangha general secretary Sarat Mohanty sought to know the action taken by the State Government to renew the shareholders agreement with the distribution companies (distcoms) owned by REL.

 Though the shareholders agreement with Nesco, Wesco and Southco had expired in April 2004, the Government has not only allowed the three distcoms to run the business but also extended financial assistance for system improvement under the capital expenditure (CAPEX) programme.

 Mohanty further alleged that the State Government as well as Orissa Electricity Regulatory Commission (OERC) did not initiate any action against REL and its distribution companies for violation or non-compliance of orders passed by the Commission and transfer of its shares to other subsidiaries without permission from Gridco.

 While REL has a majority, 51 per cent stake in all the three distcoms, the State-run Gridco is the minority shareholder.

 Meanwhile, responding to a writ petition from Mohanty, the Orissa High Court issued notices to the State Government, OERC and Gridco on June 25 to submit their replies to the issues raised by the petitioner. Mohanty had sought a direction from the High Court to the State Government not to extend financial assistance to the three distcoms pending the renewal of the shareholders agreement.

 The CAPEX programme of the State Government envisages an investment of ` 2,400 crore on infrastructure development in the distribution sector.

 Under the programme, the Government will extend ` 1,200 crore assistance to the distcoms in the shape of loan with the condition that ` 666.67 crore will be converted into grants if the distcoms achieve a loss reduction target of three per cent per annum.

The distcoms are required to arrange 50 per cent of the cost. Of the total outlay of ` 2,400 crore, ` 468 crore will be invested in Wesco, ` 504 crore in Nesco, ` 492 crore in Southco and `936 crore in Cesu areas.

 Though CESU has arranged counterpart funding of ` 205 crore from the Rural Electrification Corporation (REC), the REL- managed companies are yet to provide their share of fund.

 Mohanty also sought to know the outcome of the meetings of the inter-ministerial committees constituted by the Government on February 6, 2010 to address several contentious issues including renewal of the shareholders agreement, corporate guarantee to the Government, repayment towards NTPC bond and counterpart funding for system improvement.

 The trade union leader has threatened to launch a peaceful agitation from October 31, if the Government failed to respond to his memorandum.

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