Coming as it does after Shiv Sena chief Bal Thackeray's proposal of providing free power to state's 24 lakh farmers, the decision might well compel the Board to burn its candle at both ends.

Politically, it may flare up the burning row between the alliance partners, as a sore BJP has already highlighted the immense financial burden of Thackeray's proposal.

The coal companies decided to implement this cash-and-carry system as the dues from the SEBs kept on mounting. The staggering dues do not include the 12 per cent interest charged on delayed payments. Of this Coal India alone isowed Rs 4484 crore. The new system of payment will ensure that the dues do not rise any further. Coal companies have decided not to supply coal to them if immediate payment is not made from next month. The Ministry of Coal has also written to the State Governments informing them of the decision.

This development follows close on the heels of the National Thermal Power Corporation's decision to stop power supply to defaulting states. NTPCs dues are Rs 8538 crore. As a result of NTPC's move, some states are trying to work out new ways to pay back the dues.

Coal Ministry officials say that there is no choice but to get tough with the defaulting SEBs and power companies. Even as MSEB tops the list, Uttar Pradesh owes Rs 509 crore, Gujarat Electricity Board Rs 492 crore and Madhya Pradesh Rs 429 crore.

Apart from the SEBs the generating companies have also got into the habit of not paying for the coal consumed.

Together the private and public sector private companies owe Coal Indian Rs 10145 crore. Ofthese the worst defaulter is Badarpur Thermal Power Corporation with dues of Rs 548 crore. NTPC is next with Rs 153 crore while the Damodar Valley Corporation owes Rs 102 crore. Private companies AEC and CESC together owe Rs 56 crore. But sources say that the SEBs are responsible for the dues of the generating companies as well. The SEBs do not pay for the power bought by generating companies which in turn do not pay for the coal consumed.

Ministry officials say the SEBs take advantage of the fact that coal companies cannot stop production of coal. The fixed costs of running a mine are very high. If mining is actually stopped, that the mine will have to be closed down.