Discom Outstanding Outstanding dues of discoms to gencos will be nilled in next 4 yrs, says Union Power Minister RK Singh: Report
Outstanding dues of electricity distribution companies (discoms) to power generation companies (gencos), which stand at Rs 1 lakh crore at any given time, will be eliminated over the next four years, Union Power Minister RK Singh has said, according to media reports.
The mammoth outstanding will be cleared as the government has converted the dues into Equated Monthly Installments, he said, according to a report in the media.
The report quoting the minister said that the EMI scheme has a maximum tenure of four years so the outstanding which stands at Rs 1,13,000 crore will be nil by 2026.
Singh explained the measures the government has taken to prevent the discoms from defaulting on payments to gencos.
One of them is the late payment fee Electricity, (Late Payment Surcharge and Related Matters) Rules, 2022 (LPS Rules 2022). It was notified by the Power Ministry in June 2022.
In case a discom fails to pay the late payment surcharge, it won't be able to get supplies from power exchanges.
In August this year, government-owned Power System Operation Corporation Ltd (POSOCO) directed three power exchanges -- IEX, PXIL and HPX -- to restrict electricity trading by 27 discoms in 13 states for non-payment of late payment surcharge.
These states included Maharashtra, Madhya Pradesh, Rasjasthan, Karnataka, Andhra Pradesh, Telangana, Tamil Nadu, Bihar, Chhattisgarh and Jharkhand.
The government has created a very robust payment security mechanism, realising that the massive dues of discoms toward gencos is getting bigger with every passing year.
Further, under this mechanism state utilities can be barred from trading on electricity exchanges for non-payment of dues.
In addition to this, state utilities can be barred from long-term electricity supplies under the power purchase agreements signed by them with gencos.
These agreements are usually for 25 years.
If a state utility doesn't pay dues, its access to the long-term power supply under PPAs would decrease by 10 percent after every 30 days from the Inter-State Transmission System (ISTS or national grid, supplied largely by central utilities and the private sector), the minister said, according to the report.
Therefore, he expressed confidence that the perennial issue of bulging dues of discoms to gencos will be nilled in the next four years.
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