Power discoms get relief of deferred payments, round-the-clock power supply

Electricity distribution companies (discoms) have been allowed to defer payments to electricity producers (gencos) and transmission companies (transcos) due to late payment by electricity consumers.

The energy ministry has asked the Central Electricity Regulatory Commission (CERC) to provide a three-month moratorium on discoms on payment to gencos and transcos.

Uniomn Power Minister R K Singh has asked state governments to issue similar directions to state electricity regulatory boards, the ministry said in a statement.

The ministry also ordered all central government gencos and transcos to continue supplying / transmitting electricity, even to discoms that had large unpaid fees. “During the current emergency, there will be no reduction in supply of any type of discomfort,” the ministry said in its statement.

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State-owned discoms collectively owe 85,000 crore rupees to electric gencos (as of December 2019). In June of last year, the Center made it mandatory to prepay Power Discoms for electric generators via a letter of credit (LC) issued by banks. The prepaid amount has now been cut in half during the lockout period. The LC mechanism ensured timely payment in the future.

The statement also noted that due to the foreclosure, consumers are unable to pay their disco dues. “This has affected the liquidity position of discoms, thus compromising their ability to pay to production and transport companies,” he added.

Thus, the ministry announced, until June 30, 2020, that the mechanism of security of the payments to be maintained by the discoms with the generators for the sending of electricity “will be reduced by fifty percent”.

This is a major relief for state-owned discoms, whose financial health is back in red with cumulative losses amounting to Rs 18,316 crore in December 2019.

This degenerated into a whirlwind of losses, the gencos delaying payment to the coal companies. The newspaper recently reported that power companies, particularly state-owned units, owed 22,770 crore rupees to Coal India Limited (CIL), Singareni Collaries Limited (SSCL) and Neyveli Lignite Limited ( NLC).

In its statement, the ministry also addressed the supply of coal and stated that in order to maintain the continuity of the supply of coal by the national coal companies and rail transport, the ministry is in contact with the ministries of railways and coal.

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