State government departments hold a sizeable chunk of the discoms’ Rs 82,073 crore pending dues; who in turn have yet to repay generation companies (gencos) their share
States may now be able to pay power distribution companies’ (discoms) their dues in 12 equated monthly instalments (EMI), as the Centre seeks to mitigate the entities’ financial health, Mint reported.
Discoms could regulate power if dues are not cleared, which 'will lead to social strife', the article quotes a source as saying.
A government document accessed by Mint showed that delayed payment disrupted cash flow management and has “repercussions on the sector’s value chain beyond state boundaries.”
Moneycontrol could not independently verify the report.
State government departments hold a sizeable chunk of the discoms’ Rs 82,073 crore pending dues, who in turn have yet to repay generation companies (gencos) their share.
The move was discussed at a power ministry review, planning and monitoring (RPM) meeting in early January, the report said. Power and Renewable Energy Minister Raj Kumar Singh had on January 27 said discom debt may find recourse in Budget 2020.
Speaking in the Rajya Sabha, Union Power Minister RK Singh on December 3, 2019 had attributed the losses in discoms to theft, inefficiencies in billing and collection by distribution companies and government departments not paying their dues on time.
Meanwhile, discoms' total outstanding dues owed to gencos rose around 48 percent year-on-year (YoY) to Rs 81,010 crore in October 2019, reflecting stress in the sector. Discoms owed a total of Rs 54,654 crore to gencos in October 2018.
In June 2019, the power ministry made it mandatory for discoms to open and maintain an adequate letter of credit (LC) as a payment security mechanism under power purchase agreements (PPAs) with effect from August 1, 2019.
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