ONE TIME SECURITISATION OF SEBs DUES
TRIPARTITE AGREEMENT
TO BE SIGNED
Government and Reserve Bank
of India will sign a Tripartite Agreement (TPA) with States for
a one time settlement of State Electricity Dues on March 20, 2003.
So far, 24 states have already signed the TPA. Thereafter, bonds
will be issued by the respective state governments.
Highlights of the Tripartite
Agreement are securitisation of the old arrears of SEBs amounting
to Rs.37,400 crore, waiver of 60% of the interest/surcharge (Rs.8,300
crore) payable by the SEBs, net outstanding converted into tax-free
SLR Bonds with interest rate of 8.5% per annum, repayment period
of 15 years with a moratorium of 5 year, incentives amounting
to Rs.6,100 crore over a period of 4 years to States participating
in the Scheme, full payment of current bills through Letters of
Credit, commitment of the States to undertake Reforms based on
performance milestones, and this one time settlement will make
concerned Electricity Boards bankable entities – opening the gate
for reforms.
The scheme is a follow
up on the Montek Singh Ahluwalia Committee recommendations and
covers the outstanding dues payable by the SEBs to the National
Thermal Power Corporation (NTPC), National Hydro-electric Power
Corporation (NHPC), North Eastern Electric Power Corporation (NEEPCO),
Damodar Valley Corporation (DVC) and Power Grid Corporation of
India (PGCIL) under the Ministry of Power, Coal India Limited
(CIL) & its subsidiaries and Neyveli Lignite Corporation (NLC)
under the Department of Coal, Nuclear Power Corporation (NPL)
under the Department of Atomic Energy and the Ministry of Railways.
Apart from the above concessions,
the States shall be offered incentives for complying with the
scheme. If SEBs or their successor entities (other than the ones
not owned by the State Government) do not default on their current
dues and adhere to the performance milestones, CPSUs shall pay
them, during the first year commencing from 1.10.2001, bi-annual
cash incentives equal to 3 per cent of the value of bonds in the
first year, 2.5% in the second year and 2% in the third and fourth
years. The incentives would add up to 19% of the total value of
the bonds. Further, if SEBs open and maintain Letters of Credit
(LCs) till the end of December 2002, CPSUs shall pay them a one-time
cash incentive equal to 2 per cent of the value of bonds. In addition,
States undertaking reforms shall also be assisted through Accelerated
Power Development and Reform Programme (APRDP) grants and discretionary
allocation of Power.
The scheme of securitisation
of outstanding dues would be operationalised by signing of a Tripartite
Agreement between the GOI, State Governments and RBI agreeing
that the entire principle and 40% surcharge will be securitised
in form of RBI bonds on behalf of the respective State Governments
with tenure of 15 years, there will be a moratorium of five years
for redemption of bonds, only 10% of the bonds can be traded in
the market by the CPSUs every year and the bonds will carry an
interest rate of 8.5% and the interest will be tax free.
