The union ministry of housing and urban affairs is working on a plan to ensure local municipal bodies pay up the ₹3,000 crore they owe state-run Energy Efficiency Services Ltd (EESL), a debt that threatens to erode its finances.
EESL supplies of technology and energy-efficient products to local bodies.
As part of this exercise, the Union power ministry has asked Andhra Pradesh, Maharashtra, Rajasthan, Telangana and Uttar Pradesh to clear dues to EESL for setting up LED street lights, said persons aware of the development.
The urban affairs ministry is preparing a mechanism where states could deduct the dues payable from the future allocation of funds to municipal bodies from central grant support.
Power minister Raj Kumar Singh said his ministry is pursuing the matter with the states.
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