No access to alternate electricity sources to defaulting discoms: R K Singh

As on Dec 14, total dues of discoms towards gencos was Rs 98,682 cr; If the disputed amount is included, the dues stand at Rs 1.09 trn, inching closer to the record highs of last year

The Centre is working on a set of draft rules that would entail that those power distribution companies (discoms) which default on payment to power generators (gencos) would not be allowed to purchase electricity from alternate sources.

R K Singh, union minister for power, new and renewable energy said any short- or long-term access of buying power including from power exchanges would be restricted to the defaulting discoms.

“We are working on a set of rules which will restrict the access of discoms to alternate arrangements for power purchase, if they have defaulted on their payments to the gencos under long term PPA. Payment should be regularised and the discoms which do not pay should not get away,” Singh said.

The minister was responding to the query with regards to the rising dues of the discoms to the gencos with which they have long term power purchase agreements (PPA).

As on December 14, the total dues of the discoms towards gencos stood at Rs 98,682 crore. If the disputed amount is included, total dues stand at Rs 1.09 trillion, inching closer to the record highs of last year.

In June 2020, the dues of discoms touched a record high of Rs 1.3 trillion. The same month, the 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 the power generating and transmission companies. State-owned lenders Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) lent Rs 45,000 crore each

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 private gencos or independent power producers (IPPs) continue to face delayed payments. Currently, out of the total dues, Rs 54,000 crore is due to IPPs and Rs 20,000 crore to the central gencos.  

The financially beleaguered discoms have been falling behind in clearing their payment. While coal shortage grappled the power sector during August-October this year, several discoms continued to purchase from power exchanges. The shortage was a result of delayed payment from discoms to gencos and coal companies.