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Panel proposes 50 per cent waiver of surcharge on SEBs dues

An official expert committee for resolving the payment problem of dues of Rs 410 billion of State Electricity Boards to central power utilities, on Friday, asked the government to waive over Rs 78 billion from interest and issue tax free bonds for the remaining Rs 336 billion.

While recommending the waiver of 50 per cent of interest surcharge, the Committee, headed by Planning Commission member Montek Singh Ahluwalia, said states should issue 15-year bonds for the principal and the remaining part of interest rate.

The decision to set up the Committee for recommending a one-time settlement to the problem of burgeoning dues of SEBs to central utilities was taken at the meeting of the chief ministers presided over by Prime Minister Atal Bihari Vajpayee in Janauary this year.

The 13-member expert panel in its report to the Power Minister Suresh Prabhu proposed that "full principal amount as well as the remaining 50 per cent of the interest, aggregating Rs 336 billion shall be securitised through bonds to be issued by the respective state governments."

Speaking to reporters, Prabhu said the bonds shall be of 15-year tenure issued through Reserve Bank of India at a tax free interest rate of 8.5 per cent annually.

The bonds may be structured to achieve a moratorium of five years on repayment of principal with the entire principal being repaid between the sixth and 15th year, he said.

"The one-time settlement of dues of SEBs would be subject to the condition that all dues on current account are paid to Central Public Sector Units," Prabhu added.

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