Power and steel companies owe Rs. 11,700 cr to Coal India

Discoms from W Bengal, MP and Rajasthan, and DVC are major defaulters with combined outstanding amount of over 50%

Despite the Uday scheme rolling in to relieve immediate stress from power distribution companies (discoms), the benefits are yet to trickle down to the other stakeholders in the power generation chain, mainly the monolith coal producer, Coal India whose outstanding dues from various power and steel companies have rocketed to over Rs 11,000 crore.

Although Damodar Valley Corporation (DVC), in March-end has cleared a part of its dues, as on April 1, 2015, Coal India is yet to recover Rs 11,700 crore from various power and steel companies.

A senior official in the company said power companies from West Bengal, Madhya Pradesh, Rajasthan and DVC are the major defaulters whose combined outstanding amount is over 50 per cent.

As per the official, power producers from West Bengal owe Rs. 2,100 crore while Madhya Pradesh owes Rs, 1,300 crore and Rajasthan accounts for another Rs. 700 crore.

However, DVC has paid back Rs 500 crore which has brought down its outstanding to Rs 1,700 crore.

Besides, companies in the stressed steel sector also owes Rs 1,000 crore to the mining company.

"West Bengal and DVC buys higher graded coal because of which their outstanding is higher", the official said.

Last year, DVC owed Rs 1,500 crore to Coal India which had increased to Rs. 2,100 crore in February this year. The Uday scheme helped the power producer clear off 23 per cent of its outstanding to Coal India after getting a part of their payment released from Jharkhand Urja Vikash Nigam Ltd recently.

As on November last year, power companies owed Rs. 8,279 crore to Coal India which scaled up to Rs. 11,000 crore in December and further to Rs. 11,700 crore in February 2015.

This situation came into being as the demand for coal declined rapidly and the coal monolith resorted back to its credit policy which it had abandoned earlier to keep its uncleared receipts in check.

"We always try to implement the cash-and-carry model but there are social commitments towards power generation which we cannot ignore as a public sector company", another senior official in the company said when asked about the reason for re-starting its credit policy.

In previous occasions, cash strapped DVC has complained about this cash-and-carry model which had been starving its power plant in Raghunathpur in West Bengal.

The financially better off NTPC, which buys coal worth nearly Rs. 4,000 crore on an average, however, has not been able to reap any benefits of the credit policy.

"We always buy coal on a prepaid basis. However, there may be minor outstanding dues on our part but its shouldn't largely affect Coal India's earnings", an NTPC official said.

Nevertheless, the debts power companies owe may not be cleared soon.

"It may take atleast a year for the power generators to reap the benefits of the Uday scheme post which their dues to Coal India may be cleared", the NTPC official said.

However, reeling under heavy pressure of over 50 mt idling coal stocks, Coal India's move to sell coal on a credit basis may widen the dues it is yet to recover.

"We have to sell coal whatever the situation may be. If we idle the stocks, we cannot continue mining more coal to meet our targets and these stocks will also deplete in quality. Besides, there is a risk of fire too", the Coal India official said.

According to power and coal minister Piyush Goyal, power plants across the nation have a 39 mt of coal stocks.