Tamil Nadu DISCOM Demanding Heavy Discounts on Pending Dues: Power Producers

APP asks Union Power Minister to direct PFC and REC not to release funds in parts

December 30, 2021


The Association of Power Producers (APP) has complained that Tamil Nadu Generation and Distribution Corporation (TANGEDCO) is forcing them to accept heavy discounts on dues payable.

In a letter to Union Power Minister R.K. Singh, it is said TANGEDCO had asked independent power producers (IPPs) to provide a 50% discount on late payment surcharge dues and a 20% discount on pending fixed charge amounts.

The letter stated that TANGEDCO recommended dues payment under the liquidity infusion schemes only to central generating stations and a few small renewable energy generators after IPPs refused to agree to the discounts.

“This is despite all the concerned IPPs having agreed in writing to abide by the Ministry of Power’s stipulations regarding LPS rates for funds disbursed under the Liquidity Infusion Schemes,” APP said.

In May 2020, Union Finance Minister Nirmala Sitaraman announced that power distribution companies (DISCOMs) would receive ₹900 billion (~$12.03 billion) as part of the Government of India’s stimulus package to help the Indian economy recover from the COVID-19 crisis.

The Association requested the Power Minister to ensure that no additional discounts are sought from the power producers. It also asked the minister to direct Power Finance Corporation (PFC) and REC to insist on non-discriminatory access to the liquidity window funds and not release funds in parts as it could put more pressure on IPPs who are refusing to succumb to the unreasonable demands of TANGEDCO.

According to data from the Ministry of Power, DISCOMs owed over ₹110.67 billion (~$1.5 billion) to renewable energy generators (excluding disputed amounts) in overdue payments across 439 pending invoices as of October 2020.

REC reported that it had sanctioned over ₹300 billion (~$4 billion) to DISCOMs in the country as of July 31, 2020. The funds were part of the central government’s stimulus package for the Indian economy. In the same month, PFC also approved ₹306.07 billion (~$4.09 billion) as part of the liquidity package.

The plight of the renewable energy developers in Andhra Pradesh is also worsening. The solar association has sought the center’s help for the release of payments by the PFC and REC to renewable energy developers having power purchase agreements with Andhra Pradesh distribution companies.

“The Indian banking system is at the risk of suffering NPAs to the tune of ₹150 billion (~$2.04 billion) to ₹180 billion (~$2.4 billion) due to this delay,” it has warned.

Harsh Shukla is a staff reporter at Mercom India. Previously with Indian Express, he has covered general interest stories. He holds a Masters Degree in Journalism from Symbiosis Institute of Media and Communication, Pune.

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