Mumbai: Public sector banks have refused to fund cash-strapped Mahavitaran, citing its accrued dues of over Rs 3,500 crore which it failed to honour so far.
   
"Over Rs 3,500 crore is overdue to these banks. Since we do not have enough cash to repay these loans, banks have informed us that they will henceforth not lend to us for our short-term requirements," a Mahavitaran official said.   

The dues to banks on working capital includes Rs 2,776 as principal amount and Rs 1,003 crore as interest.
   
The utility has failed to honour its dues so far, as the state power regulator Maharashtra Electricity Regulatory Commission (MERC) has not allowed it to recover the gap of over Rs 7,600 crore by way of electricity tariff hikes. It has not been regular in servicing its obligations to banks since 2009 due to poor cash flow.
   
"If we cannot repay, we will stop borrowing from these state-run lenders from the next fiscal. This means we won't be able to undertake any infrastructure projects from the next fiscal. As a result, we won't be able to add new connections. If we are not allowed to recover the revenue gap of Rs 7,623 crore, by hiking electricity tariff, we may also have to resort to load shedding," the official said.
   
Incidentally, Mahavitaran has filed a petition before the MERC to approve Rs 50,702-crore revenue for FY12-13, which includes the revenue gap of Rs 7,623 crore, besides revenue from existing tariff which is nearly 43,127 crore.
   
The state utility has also appealed to the MERC to permit it to collect Rs 3,037 crore as interim relief before the tariff order of September.
   
For its long term requirements, the utility borrows from the Rural Electrification Corporation (REC) and Power Finance Corporation (PFC).
   
On an average, the utility gives nearly 7.5-8 lakh connections every year. In the past two years, nearly 20 lakh new connections were given.

(Agencies)

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