Shillong, June 4: Chief Minister Conrad K. Sangma has assured that none of the employees of the Meghalaya Energy Corporation Limited (MeECL) will be laid off in the proposed handing over of its distribution circles to REC-PDCL. He said the proposed contract is only a management contract and there is nothing about giving any kind of lease or assets to anybody. At the same time, a burden of Rs. 560 crores will be put on the state government if the distribution franchisee does not go to REC.

Clarifying the whole situation, Conrad told reporters on Friday that there is no question of anyone being removed from the MeECL. “There is no question of any kind of laying off, there is no question of anyone losing a job. There will only be a complete revamp of the overall staff, so that we can improve the overall efficiency and increase the number of people wherever the manpower is less,” he said.

One of the major reasons to bring in REC is to bring some professionalism into MeECL’s functioning and improve its overall efficiency and management of its assets while the state also saves a lot on paying for the loan amount. It’s a choice between improving the efficiency, and the finance department and state government taking the entire burden of the loan that it will have to pay, which amounts to Rs. 1600 crores.

Also, he informed that there has been no agreement that has been signed; and no final decision has been taken by the government. “We are still examining the pros and cons on how to move forward,” he said adding that the proposal is still pending with the state government.

The cabinet will sit against on Wednesday next week and take a call on this.

MeECL’s habit of taking loans

The suggestion for the lease agreement actually comes from the State’s Finance department as the MeECL’s bailout amount of Rs. 1600 crores is quite a burden on the state, who’s finances are already under stress to the COVID pandemic. The reason finance department has put this condition on based on the question of: How long will the Meghalaya government keep bailing the MeECL out? Why should the Meghalaya government have to bailout MeECL every time? Why can’t we have a system where we can improve the overall efficiency of MeECL?

The state government hopes that MeECL should also take atleast 25% of the pressure to clear the loan while the state government has agreed to stand as guarantor to pay 75% of the interest and the loan amount if there is a default.

The idea is that MeECL cannot keep taking loans to run its establishment while it becomes the government’s job to clear these loans. “If we are going to bail them out for the 75% which the state government will have to pay, atleast 25% of that pressure MeECL must also take, it must realise that they are also equal partners in this and they must also increase their overall functioning,” the CM said. Thus, the 25% translates to giving out their distribution franchises.

Rationale behind the proposed deal

The CM explained that the REC will only be given the management of MeECL wherein the latter will also invest because they have to guarantee a certain amount revenue to the State. The company is not being given to them free. At the same time, there is an effort to create competition to improve the distribution franchises (DF) in the long run.
Also, the revenue guaranteed by REC will be much higher than the collection the government is currently seeing from the MeECL.

Govt stands divided on the issue

Chief Minister Conrad Sangma also informed that when this discussion started, MeECL and the power department and the power minister have been completely against going for this DF. MeECL does not want to give any of its circles, power department and power minister they don’t want to give any of the circles for distribution franchisee; they want to run it themselves.

As of now, the proposal has reached to Cabinet. Conrad said the cabinet will now review this entire aspect and it will take a decision in the next one week. It will decide whether it will be appropriate for the state government to take the entire burden of the loan and pay and bailout MeECL all the time, which it has been doing quite a number of times, or will it look at the system where it can allow some professionalism to coming in without harming the structure of MeECL, without harming the employees but the overall system becomes more professional and efficient.

“This is a critical issue. The cabinet has not decided on which way to go. We will spend the next 4-5 days looking at all the options that are there and only then, once we take all the stakeholders on board, once we take all the different organizations like the engineers and other officials on board and discuss with them. If we can find a way to move forward in which we are able to improve the efficiency and yet not allow the DF, we will be happy to move forward in that line also,” the CM said.

Although the big question is about the Rs. 560 crores of revenue that the government of Meghalaya will have to give out additionally to bailout MeECL.