Losing money

3 May 2002

Nuclear Power Corporation of India Ltd (NPCIL) is set to lose $160 million owed to it by regional power utilities in various states, but it will be able to reduce supplies to utilities that fall substantially behind on debts in the future.

This is the result of a "one-time settlement" scheme approved by the central government in March for settlement of over $9 billion in outstanding payments owed to its power, coal and transport enterprises up to September 2001 by the power utilities.

The settlement scheme approved by the central government exempts the state-owned utilities from paying 60% of the interest owed and provides security for the remaining interest and principal. The bonds will carry a rate of 8.5% pa and be redeemed after a five-year lock-in period over 10 years. If all the states accept this settlement scheme, NPCIL stands to lose 60% of the $265 million interest. NPCIL will also have to wait to get the balance of $432 million for the 15-year bond repayments. The plan is only being made available to states that agree to reform their power utilities and improve their finances so that they do not run up the arrears again.



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