Will Spanco contract be terminated?
Anjaya Anparthi, TNN

NAGPUR: MSEDCL's franchisee policy is in doldrums as Nagpur and Aurangabad franchisees - Spanco and GTL - have failed to pay up their dues causing huge loss to the distribution company. MSEDCL has issued a show cause notice to the two companies asking why their contract should not be terminated for non-payment of dues.
MSEDCL's director (finance) Dattatray Wavhal has convened the final meeting with representatives of the two companies on Friday to discuss the issue. If the two companies fail to pay their dues in one go, he will recommend termination of their contract to MSEDCL's board of directors.
Spanco's dues have mounted to Rs 153 crore as on Thursday while GTL's figure is around Rs 140 crore. Last week, Spanco owed Rs 124 crore to MSEDCL while GTL's dues had reached Rs 130 crore. Wavhal told TOI that the franchisees had committed a criticial event of default as defined by the distribution franchisee agreement (DFA) by continuously not paying dues.

MSEDCL had issued eight reminders to the two franchisees between June 3 and August 18. But they still jointly owed Rs 254 crore. It had sent nine bills amounting to Rs 207 crore between June 1 and August 15 to Spanco. Every time, Spanco made only part payment of the bills and the dues kept on rising. The franchisee paid Rs 123 crore in 13 installments. GTL was issued eight bills totalling Rs 284 crore between June 1 and August 15. It paid Rs 154 crore in 15 installments.
Senior vice-president of Spanco Kaustabh Dhavse said that the company would clear the dues within two weeks. "We have applied for a bank loan that will be sanctioned in two weeks. We will pay the dues immediately," he said. Dhavse further said that MSEDCL had Spanco's security deposit. He also said that the company would pay penal interest for delay in payment as per agreement.
A consumer organization MRVGS has filed a petition in Maharashtra Electricity Regulatory Commission (MERC) over franchisee issues. It has alleged in the petition that MSEDCL was selling power to franchisees at a loss and has urged MERC to examine the agreements. MRVGS president Pratap Hogade has urged MERC to go through the franchisee agreements and fix terms and conditions for future agreements. According to him, the loss caused due to franchisees was being passed on to consumers through higher tariff.