The Association of Private Producers (APP) has written to the Ministry of Power, seeking special dispensation measures for the power sector to overcome further payment defaults.
In an e-mail written to the ministry, APP has highlighted that Uttar Pradesh has written a letter to power producers declaring COVID-19 as Force majeure event. The UP government's letter has brought in a frenzy among the power generators as it indicates that no payment can be expected from the UP government for bills raised for the month of March and thereafter.
"The supply of power in this hour of the global crisis is crucial to keep the entire system working. The government needs to see that the generators can sustainably generate power. Expropriating the income stream of generators will make the generation "unviable", said an industry source.
The power ministry, on March 28, decided to reduce payment security to 50 percent for the generation companies until June 30 and gave a moratorium of three months on payments to generation and transmission companies. Uttar Pradesh has the highest amount of overdue outstanding payments at Rs 8,431 crore which account for 43 percent of all India dues at the end of January month for the private producers. The private power producers expect similar defaults from states like Tamil Nadu, Karnataka, Telangana, and Rajasthan.
Under the lockdown situation, APP has sought deferment of advance payment for coal and rail freight and also suggested to provide liquidity window to states to enable them to continue paying for power supplies.
"A large segment of industrial and urban domestic consumers already pays online for their electricity usage, so a portion of payments is reaching the discoms. Relevant authorities can review and bridge the gap that is resulting from non-receipt of payment through the existing recommendations given by P.K. Sinha-led high-level empowered committee," said another private power producer requesting not to be named.
At the end of January 2020, discoms had Rs 88,311 crore as outstanding to power generating companies. Outstanding at the end of January for PSU electricity generation companies stand at Rs 29,714 crores, for state-run companies Rs 20,095 crore, independent power producers at Rs 19,764 crore and Rs 6,618 crore for the renewable energy companies.
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