Shares of utilities and power producers declined on Thursday after the government said it is working on a plan for state run electricity distributors to pay dues via monthly instalments across four years.
Adani Green Energy fell as much as seven percent, Adani Transmission five percent, JSW Energy six percent, Adani Power five percent, and Tata Power three percent. BSE Utilities Index declined 3.3%.
As on 18 May, discoms owed over Rs 1 trillion (lakh crore) to generating companies. "Discoms to be allowed to pay dues in up to 48 monthly instalments; the move will save around Rs 19,833 crore on late payment surcharge in the next 12 to 48 months," the government notification said.
"Delay of payments by a discom to a generating company affects the cash flow of a generating company, which needs to make provisions for input supplies such as coal and for keeping adequate working capital for day-to-day operation of the power plant, etc.," the notification added.
States like Tamil Nadu and Maharashtra that have large dues will save over Rs 4,500 crore each as a result of this measure. Uttar Pradesh will save around Rs 2,500 crore while states like Andhra Pradesh, Jammu and Kashmir, Rajasthan, and Telangana will save Rs 1,100-1,700 crore, the government added.
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