NTPC to Curtail Power Supply to Jammu and Kashmir as Unpaid Dues Reach ₹20 Billion

The diversion of power from the state is likely to start from February 19, 2019

February 13, 2019


The National Thermal Power Corporation (NTPC) has written a letter to the Power Development Department (PDD) of Jammu and Kashmir, warning to restrict power supply and reallocate the power from its stations due to non-payment of dues.

As per the letter, the total outstanding dues has reached ₹19.84 billion (~$280.32million), out of which ₹16.26 billion (~$229.67 million) is pending for more than 60 days. Some dues have been pending for almost a year.

According to the power purchase agreement, the payment for the energy bills should be made within two months from the date of issue of the bill. The PPA also says that in case of default in payment, NTPC will have the right to discontinue or regulate the power from its stations.

The government of India issues allocation letters from time to time for maintaining letters of credit and adhering to the terms of PPA. In case of failure in maintainng the letters of credit, NTPC can cut the power supply.

The NTPC letter cites the Central Electricity Regulatory Commission, 2010:

“In case of outstanding dues or in case the required letter of credit or any other agreed payment security mechanism is not maintained as per the agreement, the generating company or the transmission licensee, as the case may be, may serve the notice for regulation of power supply, on the defaulting entity, for reducing the drawl schedule in case of generating company …”

As the payment has not been made beyond 60 days, NTPC has now given a notice for the regulation of power supply to Jammu and Kashmir for a period of 3 months, effective from February 19, 2019.

NTPC has proposed 939.08 MW for diversion and asked other regions for their requirement of power so that the excess energy can be utilized.

Before this, Mercom reported that power distribution companies in Andhra Pradesh, Telangana, and Karnataka also owe NTPC ₹58.38 billion (~$814.99 million) in outstanding power bills (both conventional and solar). A total amount of ₹18.84 billion (~$262.6 million) is due to be paid by DISCOMs to NTPC for solar power supplied under the National Solar Mission. Due to the unpaid dues, NTPC had issued similar notices to them.

The Ujwal DISCOM Assurance Yojana (UDAY) program was supposed to be helping some DISCOMs stuck in a debt-rut. Based on the non-payment of dues, it does not look like UDAY has helped the financial situation of DISCOMs.

Recently  Ministry of Power constituted a new committee to study and submit recommendations into the issue of delayed payments by DISCOMs to power generating companies and independent power producers. The sooner the final results are published, the better it will be for renewable energy sector.