Discoms’ outstanding dues to gencos nearly halved in Jan

Total outstanding dues owed by electricity distribution companies (discoms) to power producers almost halved to Rs 62,681.68 crore in January, compared to Rs 1,21,030 crore in same month in 2022.

Experts said this substantial reduction in the discoms’ total outstanding is mainly due to various steps taken by the government, like implementation of late payment surcharge rules and providing facility of equated monthly installments (EMIs) to utilities.

According to the portal PRAAPTI (Payment Ratification And Analysis in Power procurement for bringing Transparency in Invoicing of generators), the total outstanding dues of discoms stood at Rs 62,681.68 crore in January, 2023, which included Rs 25,526.42 crore overdue amount, that was not cleared even after 45 days of grace period offered by generators.

In January 2022, the total outstanding dues of discoms stood at Rs 1,21,030 crore, which included the total overdue amount of Rs 1,01,357 crore.

Power producers give 45 days to discoms to pay bills for electricity supply. After that, outstanding dues become overdue and generators charge penal interest on that in most cases.

The PRAAPTI portal was launched in May 2018, to bring in transparency in power-purchase transactions between generators and discoms. The portal has been revamped recently.

Earlier in November, 2022, the power ministry had stated that with the implementation of Electricity (LPS and Related Matters) Rules, 2022, remarkable improvement has been seen in recovery of outstanding dues of Suppliers including Generating Companies, Transmission Companies and Traders.

The total outstanding dues of States which were at Rs 1,37,949 crore as on June 3, 2022, have been reduced by Rs 24,680 crore to Rs 1,13,269 crore with timely payment of just four EMIs, it had stated.

For payment of EMI of Rs 24,680 crore, five states had taken a loan of Rs 16,812 crore from Power Finance Corporation (PFC) and REC Ltd and eight states had opted to make their own arrangement, it has stated.

Distribution companies are also paying their current dues in time to avoid regulations under the rule.

Distribution companies have paid almost Rs 1,68,000 crore of current dues in the last five months, it had said.

Based on the results achieved so far, it is expected that strict implementation of the LPS Rules will bring back financial viability of the power sector in the country and would attract investment to ensure reliable 24×7 electricity to consumers, it had stated.
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“This Rule has not only ensured that the outstanding dues are liquidated but has also ensured that the current dues are paid in time. It may be seen that the Rule has played a vital role in ensuring the financial discipline in Discoms,” the ministry had said.

To give relief to power generation companies (gencos), the Centre enforced a payment security mechanism from August 1, 2019. Under this mechanism, discoms are required to open letters of credit for getting power supply.