Discoms taking longer to clear their dues

The discoms seem to be taking full advantage of the Electricity Late Payment Surcharge Rules, 2021, by which penalty for late payments was reduced to a “base rate” which is 500 basis points more than SBI’s marginal cost of funds-based lending rate.

State-run power distribution companies (discoms) are holding back payments to electricity generators for as long as one-and-a-half years, information available in the Union power ministry’s ‘Praapti’ portal shows. Power generators usually raise bills between 5 to 15 days after the end of every month and discoms are supposed to pay them within 30 days or at best 60 days. But while discoms are clearing their bills – they are waiting for as long as they can to do so. In March, for instance, they cleared bills worth Rs 30,438 crore.

Delaying payments to generators help cash-strapped discoms manage their working capital cycles and avoid costly working capital loans. But it is taking a toll on power generators which need to pay for coal in advance and service their debt obligations

“With the second wave of Covid overwhelming the country, timely payments have become critical for us. We need the resources to ensure continuous supply of electricity,” a senior executive at an independent power generator told FE.

The discoms seem to be taking full advantage of the Electricity Late Payment Surcharge Rules, 2021, by which penalty for late payments was reduced to a “base rate” which is 500 basis points more than SBI’s marginal cost of funds-based lending rate. Earlier, the penalty was 18%. The rules were changed in February.

The average delay is highest in Andhra Pradesh at 514 days, followed by Tamil Nadu where payments are now late by 419 days. Other states that are taking time to pay their bills include Karnataka (331 days), Odisha (329 days) and Maharashtra (323 days).

Among the generators which provided their inputs to the Praapti portal, Adani Power had the highest pending overdues of Rs 18,408 crore at FY21-end. NTPC’s overdues stood at Rs 5,024 crore while the same for DVC was Rs 4,888 crore. Other private power producers, to whom discoms owed money, were GMR Energy (Rs 4,960 crore), Bajaj Lalitpur (Rs 4,817 crore), Tata Power (Rs 2,447 crore) and Sembcorp (Rs 2,376 crore).

As per the latest update on the Praapti portal, discoms’ ‘overdues’ — pending receivables of 45 days or more — to power producers stood at Rs 74,202 crore at the end of March 2021, more or less similar to that a year ago. This was earlier shown as Rs 82,400 crore. Among the states which owed the highest amounts to power generators at FY21-end are Tamil Nadu (Rs 16,209 crore), Rajasthan (Rs 10,356 crore), Maharashtra (Rs 9,859 crore), Uttar Pradesh (Rs 5,688 crore) and Andhra Pradesh (Rs 5,111 crore). Earlier, the overdue amount of Maharashtra shown was Rs 18,652 crore.