Power discoms get relief of deferred payments, round-the-clock power supply

State owned discoms collectively owe Ra 85,000 crore to power gencos (as on December 2019)
Power distribution companies (discoms) have been allowed to defer payments to power generators (gencos) and transmission companies (transcos) in the wake of delayed payments by electricity consumers. 

The power ministry has asked the Central Electricity Regulatory Commission (CERC) to provide a three-month moratorium to discoms on payment to gencos and transcos.

Uniomn Power Minister R K Singh requested state governments to issue similar directions to state electricity regulatory commissions, according to a ministry statement.

The ministry also directed all the central power gencos and transcos to continue supply/transmission of electricity even to the discoms which had large outstanding dues. "During the present emergency, there will be no curtailment of supply to any discom," the ministry said in its public statement.

State-owned discoms collectively owe Rs 85,000 crore to power gencos (as of December 2019). In June last year, the Centre made it mandatory for power discoms to prepay to power generators through Letter of Credit (LC) issued by banks. The prepaid amount has now been reduced by half under the lockdown period. The LC mechanism ensured timely future payment.

The statement further noted that due to the lockdown, consumers are unable to pay their dues to the discoms. "This has affected the liquidity position of the discoms thereby impairing their ability to pay to the generating and transmission companies," it said. 

Thereby the ministry announced , till June 30, 2020, the payment security mechanism to be maintained by the discoms with the power generators for dispatch of power "shall be reduced by fifty percent."

This comes as a major relief for state-owned discoms, financial health of which is back in red with cumulative losses standing at Rs 18,316 crore as on December 2019.

This has spiralled into a loss vortex with gencos delaying payment to coal companies. The paper recently reported, power generating companies, especially the state government owned units owe Rs 22,770 crore to Coal India Limited (CIL), Singareni Collaries Limited (SSCL) and Neyveli Lignite Limited (NLC).

The ministry in its statement also addressed coal supply and said in order to maintain the continuity of supply of coal by domestic coal companies and transportation by railways, the ministry is in touch with the Ministries of Railways and Coal.


Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel