Discoms' dues to gencos touch Rs 1.19 trillion amidst coal-power crisis

The dues of state-owned power distribution companies (discoms) to power generators (gencos) have touched Rs 1.19 trillion, at a time when the country battles a coal and power shortage crises. The lion’s share of dues is to privately owned or independent power producers (IPPs), while renewable power units continue to see an increase in dues.

The dues to central government gencos, which are primarily NTPC, NHPC, among others, have witnessed an increase of 25 per cent. This is despite an incentive scheme announced in 2020 to assist discoms to clear their dues.

The Union Ministry of Power recently asked six states to clear their dues to power generating stations and national miner Coal India (CIL).

For IPPs, this is double trouble.

At one end, their dues are rising exponentially. On the other, their cost is going up, with domestic coal unavailability and pressure from the Centre to import coal, said a senior private genco executive.

Renewable energy-based power units are also facing delayed payment and curtailment of power. Their dues have risen 4 per cent since January. The dues to renewable units have not come down since last year and registered a 34 per cent increase to date. The dues of discoms to renewable units have not reduced despite the Centre announcing a special incentive scheme, this paper had reported recently.

According to the government data, Tamil Nadu is the biggest defaulter, with Rs 20,842 crore dues to gencos and Rs 700 crore to CIL. It is followed by Maharashtra, with Rs 18,000 crore dues to gencos and Rs 2,500 crore to CIL. Uttar Pradesh owes Rs 9,000 crore to gencos and Rs 300 crore to CIL.

“Despite letter of credit and late payment surcharge in place, the dues continue to rise. We have represented to the Centre that state utilities are still not paying,” said Subrahmanyam Pulipaka, chief executive officer, National Solar Energy Federation of India (NSEFI).

Peak solar and wind power generation season has commenced, but plants not only face historic dues but also curtailment in several states. According to the real-time tracking portal of the NSEFI, 650 megawatt (Mw) was curtailed by states Saturday.

Tamil Nadu Spinning Mills Association (TASMA) in a letter to the state’s power transmission company said wind energy curtailment started on the first day of commencement of the wind season for 2022-23. 

“Almost 60 per cent of the wind energy was curtailed. This is alarming for every stakeholder in the renewable energy sector. We request that the maintenance of thermal power stations be scheduled during the wind season, while the wind energy is kept active,” wrote TASMA.

Andhra Pradesh and Telangana are the other two states limiting renewable energy.

“While the curtailment is currently lower than last year, it still is happening. Andhra Pradesh has not paid the full tariff for the past two years,” said Pulipaka, adding that NSEFI has expressed to the government that close to 350-400 Mw of solar can be brought online in two months.

“Renewables are the first respondents and the first victims in a power crisis like this. While the Centre is pushing laws, more support is needed from states,” added Pulipaka.

Solar and wind power units have a must-run status and cannot be curtailed. Yet, the seasonal energy source is curtailed by discoms to avoid payment. Most discoms divert more payment to coal-based units.

In June 2020, the dues of discoms touched a record high of Rs 1.3 trillion. The same month, Union Finance Minister Nirmala Sitharaman announced a special liquidity infusion scheme for the ailing power distribution sector. The Rs 90,000-crore loan scheme was for discoms to clear their dues to power generating and transmission companies.

However, the scheme had limited impact. After reducing minimally in March 2021, the dues started rising again June onwards as demand for power increased during the summer months. While the scheme ensured timely payment to the central government gencos, the IPPs continue to face delayed payments.