A board of power meters hang in a shop in New Delhi, India. (Photographer: Adam Ferguson/Bloomberg News)

Rising Dues May Affect Supplies, Says Power Producers’ Lobby

Joining the chorus against power distribution utilities delaying payment to electricity producers, the Association of Power Producers has said the burgeoning dues may adversely affect electricity supplies.

Earlier this month, state-run NTPC Ltd. had given notices to Andhra Pradesh, Karantaka, Telangana and Jammu and Kashmir for curtaining power supply over pending dues.

The Association of Power Producers, in a memorandum to the government, sought Power Minister RK Singh’s intervention to resolve the issue. The Association of Power Producers is an industry body of 27 leading independent power producers, including Adani Power, GMR, Jindal Power, JSW Energy and Sembcorp Energy India.

“We would be grateful if these states can be asked to clear pending payables, as further piling up of dues may result in inability of generations to pay for coal, and this in turn may adversely affect the power supply position,” Ashok Khurana, director general at Association of Power Producers, said in the letter to the power minister.

According to the letter, the overall pending dues across the country as of November 2018 are more than Rs 25,000 crore, of which the private sector generators’ share is Rs 14,600 crore. The figure does not include the payables regarding change in law, which are about Rs 18,000 crore.

The major defaulter states are Uttar Pradesh (total dues Rs 4,119 crore), Maharashtra (Rs 3,457 crore), Karnataka (Rs 3,049 crore), Tamil Nadu (Rs 2,282 crore) and Andhra Pradesh (Rs 2,084 crore).

According to the ‘Praapti’ portal, which provides data of outstanding dues of thermal power companies, distribution companies across India owe Rs 40,995 crore cumulatively as of November 2018.

The distributing companies cumulatively owe the maximum to Adani Power Ltd. (Rs 7,321 crore), followed by Lalitpur Power Generation Company Ltd. (Rs 2,246 crore), GMR (Rs 1,788 crore), Sembcorp Energy India (Rs 1,521 crore) and CLP India (Rs 1,225 crore) among the private producers, as per data on the portal.

Last week, NTPC had issued a notice to Jammu and Kashmir, threatening to cut supplies from Feb. 18 for not clearing outstanding dues of more than Rs 1,600 crore.

On Feb. 5, the company had issued similar notices to distributing companies in Telangana, Karnataka and Andhra Pradesh as the states had as much as Rs 4,138.39 crore outstanding dues for over 60 days. However, the notices were later put in abeyance after assurances to make payments.

The high-level empowered committee headed by Cabinet Secretary PK Sinha has recommended discounting of distributing companies’ power bills towards generators. It had suggested in its report submitted in November last year that the Public Financial Institutions, such as Rural Electrification Corporation Ltd. and Power Finance Corporation Ltd. may discount the receivables from distributing companies and make upfront payment to the generators.

The financial institutions can realise their dues from the distributing companies in due course of time and charge interest for the period of delay in payment, the panel had said, pointing out that this is a common practice in the business world and most of the banks provide this facility.

In December last year, the government had constituted a group of ministers headed by Finance Minister Arun Jaitley to vet the recommendations of the high-level panel on stressed power projects and forward its comments for consideration by the Union cabinet. However, the panel has yet to forward the specific recommendations.