Discoms’ dues to power producers rise by 10% to Rs 82k cr at FY21-end

Stressed discoms cannot raise funds at cheaper rates, even though interest rate on the special PFC-REC loan will be 150 bps higher than the rate at which they borrow.

State-run electricity distribution companies’ (discoms) ‘overdues’ — pending receivables of 45 days or more — to power producers stood at Rs 82,400 crore at the end of March 2021, up 10.3% from a year earlier.
Though the overdue amount is expectedly lower than the February figure of Rs 91,072 crore because the discoms clear large portions of dues in the last month of the fiscal, this time money paid by them in March (Rs 30,438 crore) was 72% higher than the value of invoices cleared in the same month in FY20, reflecting that utilisation of the PFC-REC loans under the Rs 1.25-lakh-crore liquidity infusion scheme announced by the Centre under the Atmanirbhar Bharat package to clear discom dues to electricity generators.

Major states which owed the highest to power generators at FY21-end are Maharashtra (Rs 18,652 crore), Tamil Nadu (Rs 16,054 crore), Rajasthan (Rs 10,353 crore), Uttar Pradesh (Rs 5,688 crore) and Andhra Pradesh (Rs 5,127 crore). According to ICICI Securities, as much as Rs 75,555 crore had been disbursed to the states by March-end under the scheme, and the above five states were among the larger beneficiaries of the loan, with Maharashtra receiving Rs 2,500 crore, Tamil Nadu Rs 14,700 crore, Rajasthan Rs 2,032 crore, Uttar Pradesh Rs 27,9740 crore and Andhra Pradesh Rs 3,300 crore.

Among the generators which provided their inputs in the power ministry’s ‘Praapti’ portal, Adani Power has the highest pending overdues of Rs 20,201 crore. NTPC’s overdues stood at Rs 7,827 crore while the same for DVC was Rs 4,888 crore. Other private power producers to which discoms owed the most as overdues at March-end were GMR Energy (Rs 4,954.1 crore), Bajaj Lalitpur (Rs 4,817.1 crore), Tata Power (Rs 2,447.2 crore), Sembcorp (Rs 2,375.8 crore). Adani’s renewable energy arm Adani Green had additional receivables of Rs 1,559.8 crore.

Funding to discoms under the liquidity infusion scheme are designed to be done in two tranches, both special long-term transition loans of tenures up to 10 years. The release of the first component of the loan is contingent on the respective state government undertaking to clear the departmental dues to its discom, and putting in place a credible mechanism to release the subsidies — meant for the consumers but routed through the discoms — in advance.

The discoms will also have to come up with a plan, endorsed by the respective state governments, to reduce their losses. Stressed discoms cannot raise funds at cheaper rates, even though interest rate on the special PFC-REC loan will be 150 bps higher than the rate at which they borrow.