New formula for settlement of SEB dues

NEW DELHI, JULY 6. The Centre and States have hammered out a new formula for the one-time settlement of the dues owed by State Electricity Boards (SEBs) to the Central public sector undertakings (CPSUs). Against the earlier proposal to waive 50 per cent of the outstanding surcharge and interest, the waiver will now be 60 per cent, the Empowered Committee of Chief Ministers on Power decided here today.

This additional waiver will mean that CPSUs will have to forgo an additional Rs. 1,574 crores from the outstanding surcharge and interest of Rs 15,746 crores. The balance 40 per cent of the surcharge and interest plus the principal outstanding of Rs. 25,727 crores would be securitised through tax-free bonds issued by the State Governments attracting 8.5 per cent annual interest, as per the original recommendations of the Montek Ahluwalia Committee on the settlement of SEB dues.

Besides, the meeting of the Empowered Committee also decided today to increase the incentive on timely payment of outstanding by one per cent. This would mean an additional outgo of Rs. 500 crores.

While some States had initially opposed the settlement scheme, the Centre was firm that the liabilities would have to be cleared in any case. However, by accepting the Ahluwalia Committee recommendations, the States would get some relief which the Centre was willing to bear despite protests by the CPSUs. The States, in their response, had demanded complete waiver of interest and surcharge.

The meeting was attended by the Deputy Chairman of the Planning Commission, Mr. K. C. Pant, the Finance Minister, Mr. Yashwant Sinha, the Power Minister, Mr. Suresh Prabhu, the Madhya Pradesh Chief Minister, Mr. Digvijay Singh, the Orissa Chief Minister, Mr. Naveen Patnaik, the Haryana Chief Minister, Mr. Om Prakash Chautala, and the Energy Ministers of Rajasthan, West Bengal and Gujarat.