Davos 2023: Discoms to clear bulk of dues by FY24, says Power Minister RK Singh

RK Singh, Minister of Power (File image)

India’s power minister RK Singh is optimistic state-run power distribution companies (Discoms) should be able to pay-off bulk of their outstanding dues by FY24 with support from the power ministry’s latest scheme. The scheme was introduced in May 2022, to help clear dues worth more than Rs 1.1 lakh crore.

Commenting on the progress of the scheme, Singh said, “(The scheme) is not only working, it is working very well.” He added, the discoms have reduced outstanding dues to the tune of Rs 30,000 crore to Rs 35,000 crore and is hopeful will be able to pay-off a bulk of the remaining dues by the end of FY24. “So, by FY23-24, I think they will wipe out the bulk of the outstanding. I won’t give you a number but I think we'll wipe out a large proportion of that,” Singh said. The minister is at Davos and spoke exclusively to Moneycontrol on the sidelines of the event.

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The country’s electricity demand shot-up to all-time highs in the summer of 2022, touching 211.856 gigawatt (GW) on June 10. This increase in demand sent the entire power value-chain in a tizzy, with payment delays emerging as a critical issue. Following which, in May 2022, the power ministry proposed a scheme to allow discoms flexibility in paying-off their pending dues to generation companies.

The scheme proposed staggered payment in upto 48 installments. To offer discoms a liquidity breather, the scheme involved a one-time relaxation and a freeze on the outstanding amount, including principal and late payment surcharge (LPSC). The freeze was to be applicable from the date of notification of the scheme, with no further LPSC to be imposed on the outstanding amount.

Prime Minister Narendra Modi on July 30 asked the state governments to clear power sector companies’ dues which are estimated at around Rs 2.5 lakh crore.

The Prime Minister regretted that the state governments are yet to clear subsidy commitments amounting to Rs 75,000 crore to power companies.

About Rs 2.5 lakh crore of companies engaged in electricity generation and distribution are stuck, he said while speaking at the closing function of the 'Ujjwal Bharat Ujjwal Bhavishya Power @2047' event. Recalling the days of power shortages, the Prime Minister said that during the last eight years, about 1,70,000 MW of electricity generation capacity has been added.