Shillong, Oct 1 (IANS): Meghalaya will stand guarantor for its cash-strapped power company to enable it raise a loan of over Rs 496 crore to pay its outstandings.

The Meghalaya Energy Corporation Limited (MeECL) owes the money to the state-owned North Eastern Electric Power Corporation Limited (Neepco).

"We have decided to act as a guarantor of the corporation to avail loans of over Rs 496 crore for paying the dues it owes to Neepco. The total amount to be paid is Rs 496.32 crore, including a surcharge amount of Rs 98.44 crore," Chief Minister Mukul Sangma told journalists on Friday night after the cabinet approved the proposal.

The loan would be taken from the Power Finance Corporation (PFC).

Moreover, Sangma informed that the cabinet also directed the Finance and Power departments to come up with measures for MeECL to realise its nearly Rs 344 crore outstanding from consumers.

"The MeECL is yet to recover outstanding dues worth nearly Rs 344 crore from the consumers in the state," he said

Meghalaya owes Neepco and central generating stations -- National Hydro-electric Power Corporation, National Thermal Power Corporation, Power Grid Corporation of India Limited and others, a total due of Rs 767 crore.

For Neepco alone, Meghalaya owes a total due, including surcharge, of around Rs 715 crore.

However, the Chief Minister said 60 per cent of the surcharge is expected to be waived off.

Sangma said the state finance and power departments have been asked to work out plans to ensure that the corporation adopts systems that enable it function in an efficient and effective manner.

The state witnesses daily outages after the water level at Umiam reservoir dropped due to scanty rainfall.

Meghalaya has vast hydro-potential of around 3,000 MW, but there are delays in planning and execution. The state's power availability is 358 MW against a demand of over 600 MW.