Cabinet to decide on MeECL outsourcing by next week

Shillong, June 4: The state government will take a decision on whether to pay Rs 1,345 crore to save Meghalaya Energy Corporation Limited (MeECL) or hand over the management of a part of the distribution circles to Rural Electrification Corporation Power Distribution Company (RECPDCL) by next week.

“The state Cabinet will again sit on Wednesday to take a final call on the matter after examining all aspects,” Chief Minister Conrad K Sangma told reporters after a Cabinet meeting on Friday.


“We will take a decision on whether it will be appropriate for the state government to take the entire burden of the loan and pay to bail out MeECL or do we look at a system where we allow some professionalism coming in without harming the structure of MeECL, without harming the employees,” he added.

The Cabinet-level discussion on MeECL came a day after seven legislators from the Jaintia Hills constituencies opposed the government’s move to privatise MeECL.

It is a “crucial issue” and “the Cabinet will spend the next four-five days looking at all options”, Sangma said and assured that no agreement has been signed on outsourcing the services to RECPDCL.

While Sangma assured that the government would weigh the pros and cons of outsourcing, he also mentioned that the state has to pay an additional amount of Rs 560 crore to save MeECL.

He also said the agreement, if it has to go forward, will be a “management contract” and no lease is being given out.

The chief minister also informed that initially when the issue was discussed, the power minister James K Sangma and officials from the power department and MeECL have expressed opposition to the idea of going for distribution franchisees (DFs).

“MeECL does not want to give any of its circles, and the power department and power minister don’t want to give any of these circles for DFs they want to run it by themselves,” he said, adding “we have asked the power department to give us all the options that are available.”

The chief minister said when the Atma-Nirbhar loan was taken, REC and PFC required the Government of Meghalaya to give a guarantee and put the budget provision for the repayment which means that if MeECL is not in a position to repay the interest and principal amount every month, then REC will be able to deduct that amount from state taxes directly from RBI.

He said however the finance department strongly felt that the state government cannot afford to pay the entire amount of the loan repayment which will be close to Rs 120 crore for the first three years and will jump to Rs 300 crore as the principal amount will come in after the three years.

“Therefore, the finance department objected to this point. We talk to REC and we ask what option we have. Then the REC said there are lots of the circles within MeECL which are having AT&C losses ranging from anything between 30% to 72%.

“Therefore, REC said if you cannot give us the entire budgetary provision or guarantee the entire loan amount through the state finances then a certain percentage of the distribution franchisees may be outsourced to the REC so that they will run and manage it,” he said.

Following the objection from the power department, chief minister said the finance department has suggested that 75% of the interest and the loan amount will be guaranteed by the government and if there is a default state government will pay but at least 25 % of the pressure must be taken by the MeECL in the form of their distribution franchisees.

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