NEW DELHI: The Union power ministry is working on a scheme to mitigate the financial woes of the distribution companies (discoms) that are unable to pay their dues, the government said in a statement on Wednesday. It also said that Union power minister RK Singh has asked the chief ministers of all states, and lieutenant governors (LG) of union territories to set up state-level steering committees for the energy transition to renewables.
Delay of payments by a discom to a generating company adversely affects the cash flow of a generating company, which needs to make provisions for input supplies such as coal, and for keeping adequate working capital for the day-to-day operation of the power plant, etc.
According to the data available on PRAAPTI (Payment ratification and analysis in power procurement for bringing transparency in invoicing of generators) portal, as of May 18, discoms had dues (excluding disputed amounts and late payment surcharge (LPSC)) totalling ₹1,00,018 crore and the LPSC dues were ₹6,839 crore.
“The proposed scheme enables payment of financial dues in easy instalments by the discoms. A one-time relaxation is being considered to be given to all the discoms wherein the amount outstanding (includes principal and LPSC) on the date of notification of the scheme will be frozen without further imposition of LPSC. The discoms will be given flexibility to pay the outstanding amount in up to 48 instalments,” the ministry said in a statement issued on Wednesday.
The liquidation of outstanding dues in deferred manner without imposition of LPSC will give discoms time to shore up their finances. At the same time, the generating company will benefit from assured monthly payments, which otherwise were not forthcoming to them. However, in case of delay in payment of an instalment by a discom, the Late Payment Surcharge shall be payable on the entire outstanding dues which otherwise were exempted.
{{/usCountry}}The liquidation of outstanding dues in deferred manner without imposition of LPSC will give discoms time to shore up their finances. At the same time, the generating company will benefit from assured monthly payments, which otherwise were not forthcoming to them. However, in case of delay in payment of an instalment by a discom, the Late Payment Surcharge shall be payable on the entire outstanding dues which otherwise were exempted.
{{/usCountry}}“As a result of the proposed scheme, the discoms will save an amount of
₹19,833 crore on LPSC in the next 12 to 48 months,” it added. States such as Tamil Nadu and Maharashtra which have large outstanding dues will save over ₹4,500 crore each as a result of this measure. Uttar Pradesh will save around ₹2,500 crore while states like Andhra Pradesh, Jammu & Kashmir, Rajasthan and Telangana will save in the range of ₹1,100 Cr to ₹1,700 crore.
The saving by discoms will ultimately benefit the electricity consumer by reducing the burden of LPSC in the retail tariff. The measure is expected to provide timely liquidation of arrears which is more important to the Generating Companies than the amount foregone on LPSC. At the same time, suitable measures are being put in place to ensure that discoms pay their dues to Gencos on a regular basis, otherwise, supply by Gencos will be reduced.