The Karnataka government is considering offering a guarantee for the borrowings of electricity supply companies (escoms) from financial institutions.
Energy Minister K.J. George recently revealed during the Assembly session that the department has requested the government to provide this guarantee. “We have requested the government that if the escoms are in need of money, then they should be able to submit their financial statements, details about grants, their profit and losses, subsidy requested and granted and revenue details to the government and obtain the guarantee when taking loans from banks/financial institutions,” he explained.
He added, “The government has responded positively to our request and is taking necessary action.” The Minister was responding to the question raised by BJP state president B. Y. Vijayendra about the financial health of five escoms and other supply companies of the State.
As of March 31, 2024, Bescom had power purchase dues amounting to ₹8360.08 crore, Chamundeshwari Electricity Supply Corporation had dues of ₹2,634.30 crore, Mescom’s was ₹1,414.50 crore, Hescom’s was ₹5,434.89 crore and Gescom’s was ₹3,121.16 crore.
With all escoms, except Mescom, facing losses in the previous financial year, the power utilities had to borrow thousands of crores from financial institutions. As of March 31, 2024, the total loan amount of Bescom was ₹18,095.82 crore, CESC was ₹4,348.54 crore, Mescom was ₹1,623.30 crore, Hescom was 10,332.40 crore and Gescom was ₹4,624.49 crore.
“These numbers indicate that the escoms are in bad shape financially. No matter how much money the government pumps into them, they are bottomless pits. The companies are doomed, and the only solution is to merge all five of them to create a holding company which an efficient officer heads,” said a former advisory member of the Karnataka Electricity Regulatory Commission (KERC).
However, the Minister denied any allegations about the financial crisis among escoms. He said, “Escoms receive tariff revisions every year from KERC at the right time. Our escoms have also received indicators of good performance on the national level. The government is subsidising electricity supply companies every month for free power provided to IP sets and the Gruha Jyothi scheme. Hence, there is no financial crisis in escoms.”
He also mentioned that Karnataka Power Corporation Limited (KPCL) has logged profits for five consecutive years now, proving that it is in good financial health. KPCL is also owed ₹9,942 crore by escoms (excluding late payment surcharge) as of December 5, 2024.
Published – December 24, 2024 09:31 pm IST