Nagpur: The common perception is that private power companies mint a lot of money. However, this does not seem to be true in case of Nagpur power franchisee SNDL.
It has suffered a cumulative loss of over Rs 900 crore in seven years of its existence. Interestingly, this has not deterred SNDL’s parent company Essel Utilities from evincing interest in franchisee tenders for other cities in the state.
A source in SNDL said the company had so far spent over Rs 6,500 crore on franchisee operations while the revenue collected from consumers was around Rs 5,600 crore. “Leave aside past dues, we are not even able to break even on annual basis. In 2017-18, we suffered a loss of over Rs 40 crore,” he said.
The source further said that every month, SNDL had to pay power purchase bill to MSEDCL. “Plus, we have to pay salary to our staff, pay vendors for services rendered by them, maintain inventory of spares etc. We are not even able to recover even the power purchase expenses,” he added.
SNDL had taken over three MSEDCL divisions of Nagpur in May 2011. The company was owned by a telecommunications company Spanco. When its dues towards MSEDCL crossed Rs 200 crore, the discom invited Essel Utilities to take over. Essel had to take a loan of Rs 300 crore to pay off MSEDCL and Spanco’s vendors. So far, it has paid Rs 112 crore of this loan.
Essel has spent Rs 316 crore on augmenting the power infrastructure of the franchisee area. So far, it has been unable to reap the benefits.
“In the coming years, SNDL will have to spend more on infrastructure. MSEDCL has sanctioned Rs56 crore under the centrally funded Integrated Power Development Scheme (IPDS) for infrastructure upgrade. This money will be eventually recovered from the franchisee. These funds are insufficient and SNDL will have to spend more from its pocket,” said the source.
Commenting on the huge losses, an SNDL spokesperson said that the company was improving its collection to reduce its losses.
“Our collection efficiency in 2017-18 was 99.5%. This year, we have set a target of more than 100%. We are looking at long term operations for recovering the money we have spent so far,” he added.
For SNDL to recover the losses, it has to collect significantly more than its power purchase expenses, which seems to be a tall order currently. It has to recover the money by 2026 when its tenure ends. However, in all likelihood, it will get an extension of another 15 to 20 years as has happened in the case of Torrent Power in Bhiwandi.