New DISCOM a ploy of cash-strapped Congress government to open door for more loans

The Telangana government is planning to set up a third DISCOM to shift debts and arrears from existing utilities TGSPDCL and TGNPDCL. Officials claim the restructuring will reduce liabilities and improve rankings, but experts warn of fiscal mismanagement as borrowings have already breached FRBM limits.

Hyderabad: In a move that has already drawn criticism, the cash-strapped State government is planning to set up a third DISCOM, the actual intention of which is easing loan ceilings and creating fresh borrowing space.

As part of the plan, the government intends to shift a large portion of debts and arrears from the two existing utilities, TGSPDCL and TGNPDCL, to the proposed entity. This is despite continuing warnings from experts against financial mismanagement and the State’s borrowings breaching stipulated limits.

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Officials said the government wants to offload significant liabilities onto the new DISCOM to improve the national rankings of the existing ones. At present, TGSPDCL and TGNPDCL together owe Rs 62,897 crore, as per the Congress government’s figures, and the State plans to transfer Rs 9,000 crore of this debt to the new entity.

The government also intends to allocate Rs 26,950 crore in pending arrears relating to power procurement to the new DISCOM, a figure that may be revised. Officials claimed the restructuring would reduce the financial burden on the existing utilities and improve their rankings.

The new DISCOM will require fresh staffing, asset distribution and appointment of Directors, including a Chairman and Managing Director. About 2,000 staff members are expected to be deployed, and the headquarters will be in Hyderabad. Modalities are still under discussion, a senior official said.

The State cabinet has already decided that agricultural power connections, irrigation schemes, Mission Bhagiratha, drinking water programmes and the Hyderabad Metropolitan Water Supply and Sewerage Board will come under the new DISCOM’s purview. The government claims this will aid better monitoring of supply and service delivery.

There are about 28 lakh agricultural pump connections in the State and all will be transferred to the new utility. At present, the subsidy for these connections is shared between the two existing DISCOMs. Once the new DISCOM begins operations, the entire subsidy component will shift to it, the official added.

The move to get more loans is even as Telangana’s borrowings have exceeded the Fiscal Responsibility and Budget Management (FRBM) limits set for the current fiscal. The Congress government has not changed gears and is continuing its borrowing spree despite economists warning it about rising debt and stagnating revenues straining the State’s finances and development spending.