Power discoms receive 3-mnth payment relief
Centre allows firms 3-month moratorium from payments to power generators and transmission companies
Power distribution companies (discoms) have been allowed to defer payments to power generators and transmission companies in the wake of delayed payments by electricity consumers, till June 30. The ministry of power has asked the Central Electricity Regulatory Commission to provide three months moratorium to discoms for paying them.
Power distribution companies (discoms) have been allowed to defer payments to power generators (gencos) and transmission companies (transcos) in the wake of the delayed payments by electricity consumers (till June 30).
The Union ministry of power has asked the Central Electricity Regulatory Commission (CERC) to provide a threemonth moratorium to discoms for paying to gencos and transcos.
R K Singh, Union minister of state for power and new and renewable energy, has also asked state governments to issue similar directions to State Electricity Regulatory Commissions (SERCS), said a statement.
The Centre and the state governments can issue directions to regulators under the Electricity Act for matters relating to public interest.
The ministry also directed all central power gencos and transcos to continue supply/transmission of electricity even to discoms that have large outstanding dues.
“During the present emergency, there will be no curtailment of supply to any discom,” the ministry said in a public statement.
State-owned discoms collectively owe ~85,000 crore to power gencos (as of December 2019). In June last year, the Centre made it mandatory for power discoms to prepay power generators through letters of credit (LC) issued by banks. The prepaid amount has now been reduced by half for power supplied during the 21-day lockdown period.
The LC mechanism was aimed at ensuring timely payments to generators by distribution companies.
The statement further noted that due to the lockdown, consumers are unable to pay their dues to discoms. “This has affected the liquidity position of discoms, thereby impairing their ability to pay the generating and transmission companies,” it said.
Haryana, for instance, on
Friday announced that due to the coronavirus epidemic, no surcharge will be levied on the electricity bill for one month since allcash counters of the department were closed for one month.
Apart from this, consumers paying their electricity bills digitally will be given a special discount of 2 per cent.
The Centre’s move comes as a big relief to state-owned discoms which had cumulative losses of ~18,316 crore as on December 2019.
Gencos delay payment to coal companies. The paper recently reported that power generating companies, especially state-owned units, owe ~22,770 crore to Coal India (CIL), Singareni Collaries (SSCL) and Neyveli Lignite (NLC).
In its statement, the ministry said in order to maintain the continuity of supply by domestic coal companies and transportation by railways, the ministry is in touch with the ministries of railways and coal.
The Uttar Pradesh government had earlier sought a direction by the Centre to treat non-payment by the state department as force majeure event. The state requested that Coal India and the railways should not insist on advance payment in the wake of the lockdown and COVID crisis.
“The present notice has been issued under the Power Purchase Agreement (PPA), notifying the event effecting the performance of obligations of UP Power Corporation (UPPCL) under the PPA. Accordingly, no cause of action or breach will arise as consequence of the Force majeure event,” said the letter by the UPPCL on Friday.
It also said discoms in Uttar Pradesh will face a major challenge in bill collection. The state said it is promoting online payment. However, till then, it will have a “significant impact on other utilities of the power sector value chain.”