NTPC asks SEBs to open escrow A/c to secure payments

State-owned National Thermal Power Corporation (NTPC) has asked state electricity boards (SEBs) to which it sells power, to open an escrow account with designated banks to secure payments, a senior NTPC executive told Moneycontrol.com.
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Jun 28, 2012, 02.21 PM | Source: Moneycontrol.com

NTPC asks SEBs to open escrow A/c to secure payments

State-owned National Thermal Power Corporation (NTPC) has asked state electricity boards (SEBs) to which it sells power, to open an escrow account with designated banks to secure payments, a senior NTPC executive told Moneycontrol.com.

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NTPC asks SEBs to open escrow A/c to secure payments

State-owned National Thermal Power Corporation (NTPC) has asked state electricity boards (SEBs) to which it sells power, to open an escrow account with designated banks to secure payments, a senior NTPC executive told Moneycontrol.com.

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Shaheen Mansuri
moneycontrol.com

State-owned National Thermal Power Corporation (NTPC) has asked state electricity boards (SEBs) to which it sells power, to open an escrow account with designated banks to secure payments, a senior NTPC executive told Moneycontrol.com.

NTPC wants the electricity boards to deposit and maintain a certain amount in the escrow account, which will act as a cushion against any default.

As on December 2011, the public sector company's debtor days worsened to 77 days against 53 days the year before. The management in its earnings call after the third quarter results said none of the states had defaulted on payments except for a one-week extension given to BSES-Rajdhani and BSES-Yamuna in Delhi region for dues of around Rs 195 crore during the quarter.

Despite the management claiming that SEBS are paying on time, the company had sent a notice to Gujarat State Electricity Board in January this year warning of discontinuation of additional power unless arrears of Rs 302 crore were cleared.

This is not the only instance where an SEB was behind on payments. In November last year, NTPC had to remind SEBs in Tamil Nadu, Uttar Pradesh, Bihar, Jharkhand and Meghalaya to pay up their pending dues or face action.

"We have approached SEBs to open an escrow account after growing concerns of payment default. Pending dues amount to around Rs 10,000 crore,"  the official told moneycontrol.com

Once the escrow account is operational and an electricity board fails to make payment on time, then NTPC will give a notice to the concerned bank to freeze the account.

However, in an e-mail response to Moneycontrol.com on whether NTPC has approached SEBS to open escrow accounts, the company wrote: “We already have a system in place for payments, nothing new is happening."

Meanwhile, India has an annual electricity requirement of 700 billion units, of which around 220 billion units are supplied by NTPC. The average monthly payment made by power procurers to NTPC is around Rs 5,000 crore.


 

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