Full budgetary support to MeECL comes with riders

Govt wants time-bound reforms, security on mortgage of MeECL assets

Shillong, June 9: The MDA government on Wednesday finally yielded under pressure and agreed to extend full budgetary support to Meghalaya Energy Corporation Limited (MeECL) for repaying the Rs 1,345-crore Atmanirbhar loan with a rider that certain targets have to be achieved in a time-bound manner.

The Cabinet took the decision based on the request and assurance given by the Power Department and the MeECL management to bring about reforms in the corporation.


This also came following opposition from several quarters, including Cabinet ministers, against lease out MeECL distribution circles to Rural Electrification Corporation Power Distribution Company (RECPDCL) for a period of 25 years.

“(We) have decided that we will give a chance to MeECL and to the Power Department with 100% budgetary support for the Atmanirbhar loan but this… will come along with certain targets which need to be met in a time-bound manner,” Chief Minister Conrad K Sangma told reporters after the meeting.

The other condition is that there has to be security in terms of mortgage of MeECL assets to the state government.

Sangma said the Finance and Power Departments have been asked to work out details of the different targets which MeECL has to achieve.

“We will inform REC and the Power Finance Corporation Ltd (PFC) that 100 percent budgetary support will be given by the state government,” he added.

In the meeting, Power Minister James Sangma and MeECL chairman proposed steps for reforms to increase revenue and reduce the aggregate technical and commercial (AT&C) losses.

“Similarly, I had a meeting with the MeECL employees and they have also expressed similar concerns in line with the power minister had said that the DF option may not be taken and state government may give full budgetary provision and the MeECL and its staff and engineers will work together to ensure that the different targets in case are put in will also be achieved,” the chief minister said.

The fund to MeECL will be given from the state government’s existing resources.

“Therefore, any payment or any support that will be given which will be a budgetary provision will come out, in case we have to pay, from the overall development budget of the state, therefore, impacting the overall development aspect,” he stated.

MeECL took the loan to pay the outstanding dues of Rs 1,345 crore to all the power generation companies which has been pending for the past 10 years. REC and PFC had put conditions on the state government while disbursing the loan.

“We have received the first tranche of the loan and before releasing the second tranche, which again is Rs 600 crore plus, REC and PFC have stressed on two options. The first option is that the Government of Meghalaya give full budgetary support for the repayment of this loan along with interest, which will amount to close to Rs 2,000 crore in the next 10 years, or give a partial budgetary support along with certain restructuring within MeECL which would be in the form of giving distribution franchisees (DFs) to REC and PFC,” Sangma said.

The power minister has been asking the government for full budgetary support.

Sangma clarified that the initial decision for distribution franchisee was to reduce “budgetary provisions and obligations on the Finance Department”.

Stating that DFs are not new in Meghalaya, the chief minister said, “A large number of them are there in Garo Hills, some are there in Khasi Hills and some are there in Jaintia Hills also, so across the state, the DFs have been there for quite some time, it is not a new concept.”

The government will work out the terms and conditions to ensure its security and MeECL reforms.

Responding to a query, the chief minister said there is no risk for the state government in giving full budgetary support to MeECL.

“As I said, the government has anyway decided to give budgetary provision of 75%, which comes to around Rs 1,600 crore in the next 10 years, 25% would mean another Rs 560 crore. Now, the important thing to note is if MeECL pays, then it does not come on the state government but if MeECL is not able to pay then the state government will have to pay — so that is really what the issue is here.

“The other side of the story is that we specially the finance department felt some kind of bringing in and infusing a competition into the system would push all the different stakeholders to start working and performing better,” he added.

The annual amount that the state government has to keep aside will be approximately Rs 150-200 crore as budgetary provision to MeECL.

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