DISCOM Dues Pile Up Despite Government’s Efforts to Ease Their Financial Burden

Power generators were owed ₹1.138 trillion in overdue payments at the end of May 2020


Distribution Companies (DISCOMs) owed renewable generators ₹97.25 billion (~$1.31 billion) in overdue payments (excluding dues under dispute) spread across 538 invoices at the end of May 2020, according to data from the Ministry of Power’s (MoP) payment ratification and analysis portal (PRAAPTI).

Outstanding dues to renewable generators stood at ₹7.28 billion (~$97.76 million). The portal also showed that ₹123.3 million (~$1.65 million) was under dispute.

Data from the portal also showed that 65 DISCOMS owed 197 power generators ₹1.138 trillion (~$15.28 billion) in overdue payments spread across 16,320 invoices at the end of May 2020. This was in contrast to nearly ₹905.77 billion (~$12.16 billion) overdue 65 DISCOMs, 12,783 overdue invoices, and 89 participating generating companies at the end of March 2020.

Overall outstanding dues to power generators at the end of the month stood at ₹130 billion (~$1.75 billion). DISCOMs paid ₹ 64.32 billion (~$863.7 million) against the overdue amounts compared to a total billed amount of ₹172.28 billion (~$2.31 billion).

DISCOMs Dues to Power Generators As of May 2020

Rajasthan had the highest overdue payment at ₹342.68 billion (~$4.60 billion), of which ₹307.45 billion (~$412.86 million) has been overdue for more than 60 days. Tamil Nadu had the second-highest amount of overdue payment at ₹163.37 billion (~$2.19 billion), of which ₹138.81 billion (~$1.86 billion) has been overdue for over 60 days. Uttar Pradesh was at the third spot with overdue payments of ₹136.91 billion (~$1.84 billion), of which ₹101.81 billion (~$1.37 billion) has been overdue for more than 60 days.

Gujarat, Himachal Pradesh, Maharashtra, and Tripura were rated “best” in terms of ease of payments by DISCOMS, while Bihar, West Bengal, and Meghalaya were rated “good.”

Arunachal Pradesh, Nagaland, Mizoram, Sikkim, Tamil Nadu, Kerala, Karnataka, Puducherry, Andhra Pradesh, Goa, Telangana, Odisha, Jharkhand, Madhya Pradesh, Rajasthan, Uttar Pradesh, Delhi, Haryana, Chandigarh, Uttarakhand, and Jammu & Kashmir received the “worst” rating in terms of ease of payments by DISCOMs.

Data from the portal showed that Adani Green Energy Limited, NLC India Limited (RE), and Tata Power Company Limited were the three non-conventional power generators that were owed the highest dues at ₹12 billion (~$161.15 million), ₹12.52 billion (~$168.13 million), and ₹18.82 billion (~$252.73 million), respectively.

Previously, Mercom reported that DISCOMs owed renewable energy generators ₹68.37 billion (~$914.5 million) in outstanding payments spread across 307 pending invoices at the end of March 2020.

To help ailing generators during the COVID-19 crisis, the Ministry of Power previously issued a clarification regarding letters of credit (LoC) to be given by DISCOMs. It stated that DISCOMs are expected to deposit LoCs for 50% of the cost of power they want to be scheduled, while the remaining 50% will have to be paid within 45 days of the presentation of the bill or as specified in the power purchase agreement (PPA). If the payment is not made as specified, the late payment surcharge will apply. The government also introduced a stimulus package of ₹900 billion (~$12.03 billion) to help them stay afloat.

Recently, the Power Finance Corporation Limited (PFC Limited) released a report with key findings on the performance of state power utilities in the country for the financial year 2018-19. It showed that aggregate losses increased by 68% to ₹496.23 billion (~$6.66 billion) during the year. The report covered the performance of 104 state power utilities.

In June, the Government of Andhra Pradesh provided a state-backed guarantee for DISCOMs to avail ₹66 billion (~$873.4 million) loan from the PFC Limited and the Rural Electrification Corporation Limited (REC). Meanwhile, NTPC Limited agreed to defer the capacity charges and provide rebates to distribution companies to the tune of ₹34.27 billion (~$455 million) during the nationwide lockdown.

A little earlier, Mercom reported about how bailing out DISCOMs at every crisis is not the right fix for the problems stemming from them. Issues like delays in subsidy reimbursements from the government, billing and revenue collection inefficiencies, inadequate tariff hikes, aging power distribution infrastructure, average technical and commercial (AT&C) losses, and power theft, among others, need to be tackled.