Report of Indian Institute of Public Administration ... - Ministry of Power

Madhya Pradesh
(b) All the cash collected by DISCOMs through Regional Accounting Offices
(RAOs) shall be transferred to MPSEB account as per the existing arrangement;
(c) All letter of credits, escrow comforts and working capital shall continue to be
maintained by MPSEB on behalf of the companies as MPSEB has first charge
over entire revenue of DISCOMs from sale of power, subject to escrow
agreements, as per the existing arrangements enforced duly supported by the
authorisation from the companies;
(d) MPSEB shall allocate cash among companies based on a predetermined priority
for payment of expenses as detailed below:
i) Statutory payments including those arising out of various Court orders;
ii) Employee cost which includes salary, contribution towards provident fund,
terminal benefits, etc.;
iii) Coal/oil supply payments of GENCO including freight charges;
iv) Payment towards purchase of power including unscheduled interchange
(UI) and wheeling charges and debt servicing to Power Finance
Corporation (PFC);
v) Essential Administrative & General (A&G) expenses of the companies;
vi) Essential Operation & Maintenance (O&M) expenses of the companies;
vii) Essential capital expenses;
viii) Debt servicing other than PFC;
ix) Any other payments;
(e) The companies shall authorise MPSEB to decide priority of payments as per
availability of cash;
(f) MPSEB shall continue to service the debt liabilities, including generic loans on
behalf of all companies.
The CFM as devised above involves transfer of a part of the responsibility of the
distribution licensees to MPSEB. There is an apparent conflict with the spirit of
4.23