Electricity meter makers stare at Rs 6,000-crore dues from states

The Centre might have directed states to pay power generators on time, but there are quite a few in the power supply chain that are languishing because of delayed payments. Leading manufacturers across the country have dues of around Rs 6,000 crore for supplying electricity meters under electrification drive Saubhagya. 

As many as 52 companies are bearing the burden of NDA government’s electrification drive with states not clearing their dues. Uttar Pradesh owes the biggest amount of around Rs 450 crore to them. 

To add to their woes, these single-phase (basic) meters would soon have to be replaced with smart meters that allow remote billing under a separate scheme of the Centre to have smart metering by 2021 across the country. The meter makers have urged the Centre to have a payment security mechanism for equipment suppliers. 

Leading meter makers, such as HPL, Secure Meters, Genus and turnkey contractors such as Larsen &Toubro are some of the players awaiting payment for more than six months now. 

These meters were supplied under Saubhagya and Integrated Power Development Scheme of the Centre. Uttar Pradesh principal secretary Alok Kumar and state Power Minister Shrikant Sharma did not respond to phone calls and text messages. There are eight companies in the state, which are yet to be paid by the government for supplying meters, said an industry executive who did not want to be named. 

The Union government had launched Sahaj Bijli Har Ghar Yojana (Saubhagya) to speed up electrification of 35 million urban and rural households in 2017. Almost all households (99.9 per cent) have been declared electrified. This entailed installing single-phase meter at every household as well. Uttar Pradesh electrified the highest 7.5 million households, followed by Bihar and Karnataka. 

The meter industry is also concerned about another scheme of the government, which would entail replacing all existing meters with smart meters. Union Power Minister R K Singh had announced that India will have 100 per cent smart metering by 2021. “We have not received payment for our existing single-phase meters and soon they would have to be replaced with smart meters. This would lead to a lot of confusion,” said an executive. 

In a representation to the Union power ministry, industry executives pleaded for payment security mechanism for equipment suppliers as well. “Bulk procurement, especially under central- or state-sponsored schemes should come with payment security mechanism. Delayed payment hurts the whole supply chain as some of the companies are aggregators and they have to pay the vendors also,” said a senior executive of a leading metering solutions company. 

To discipline payments to power generators, the Centre announced last month that the ‘Letter of Credit’ mechanism should be mandatorily followed by the distribution companies as a payment security mechanism while procuring power.

The metering industry wrote to the Uttar Pradesh government last month for speeding up the payment. The industry said distribution companies were not adhering to the payment schedule. “The size of meter industry is Rs 3,500 crore and here there is payment delay of Rs 450 crore. The manufacturers have to pay their vendors and delayed payment from discoms breaks the chain of delivery,” said the communication, reviewed by the paper. 

Several industry executives blamed the financial weakness of state-owned power distribution companies (discoms) for payment delays, and the delay sometimes goes beyond 180 days. Uttar Pradesh has five distribution companies. Discoms are struggling financially due to spiralling losses, even after the reform scheme UDAY. The cumulative financial loss stood at Rs 28,369 crore at the end of FY19, up 88.6 per cent, according to the UDAY portal of the Ministry of Power. 

Launched in 2015, UDAY is aimed at turning around the state owned discoms financially and operationally. While the financial part was concluded with states taking over the losses of discoms and issuing bonds, the operational front is facing challenges. Several agencies have declared UDAY to be unsuccessful and Finance Minister Nirmala Sitharaman in her Budget speech this year said the scheme needed to be reviewed. 

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