Piling dues of discoms choke power producers’ cash flow

Power producers are in a bind over swelling dues owed by the electricity distribution companies (discoms). By the end of October 2018, the accumulated dues had climbed to ~38,904.47 crore, leaving the power generators in distress. Irked over the delay by the unresponsive discoms, NTPC recently sent notices to discoms in Telangana, Andhra Pradesh and Karnataka over pending dues after the discoms failed to honour their assurances to clear the backlog soon.

The pendency in the three states is in upwards of ~4000 crore with the delay running into over 60 days. However, NTPC has decided against regulating power supply after the discoms gave fresh assurances on payments. NTPC had slapped notices by invoking provisions contained in the Central Electricity Regulatory Commission (CERC), the central power regulator.

But NTPC’s counterparts in the private sector are constrained to act tough with discoms in most states, owned by the state governments.

“We have built our case with the Union power ministry. But to this day, we have only been getting assurances. Mounting dues is hurting the cash flow of the private power generators. The companies need a healthy cash balance for operational expenses and buying critical inputs like coal. If you ask me, most of the independent power producers (IPPs) today are in distress largely because of the accumulated dues owed to them by discoms”, said a senior executive with a private power producer.

Of the piled up ~38,904.47 crore in dues, NTPC tops the list with a share of around 40 per cent. Data sourced from the Union power ministry shows the maharatna power producer has to recover ~15,623.64 crore from the erring discoms. Others that trail NTPC are Adani Power (~69,57.33 crore), National Hydroelectric Power Corporation or NHPC (~2,572.71 crore), Damodar Valley Corporation or DVC (~1,990.59 crore), GMR Energy (~1,630.40 crore) and Tata Power (~1,139.93 crore).

The situation is more pronounced in Punjab and Odisha where discoms have defaulted in payments to power generators for two to three years. Officials at Gridco Ltd, the state owned bulk power buyer, were not immediately available for a comment.

“What has disconcerted power producers is that the discoms besides not paying on time are also pressuring us to waive off interest amounts accrued on non-payment of dues on time. We have flagged this issue in meetings with the Union power ministry and Central Electricity Authority (CEA)”, an industry source said.