New scheme in the works to push discoms clear dues of over Rs 83k cr

New Delhi: The Union government is working on a scheme to push state distribution utilities to pay more than Rs 83,500 crore they owe to power producers within six months, power and renewable energy minister RK Singh told ET.

“We are working on a schedule for repayment of legacy dues of distribution companies to power plants. We will give six months time (from the launch of the scheme) to discoms to make the payments. We will offer incentives for on-time payments and penalise states if the discoms do not comply,” he said.

He said the incentives and penalties are being worked out by the power ministry and the scheme will be announced soon.

According to data available on the power ministry’s Praapti Portal, as of September 2019, the outstanding payments of distribution companies to power plants totalled Rs 83,588 crore. Of this, the overdue outstanding amount is Rs 69,139 crore. Rajasthan, UP, Jammu & Kashmir, Tamil Nadu, Telangana, Goa and Karnataka are the big defaulters.

Andhra Pradesh discoms have paid Rs 1,900 crore of the Rs 2,500 crore they owed to power generators. In his meeting with state government officials on Tuesday, Singh directed distribution companies to clear payments for the months of October, November and December, too.

The power ministry had earlier directed discoms to open letters of credit in favour of power purchases to stop creation of further discom dues. With the new scheme, the ministry proposes to liquidate the accumulated dues.

Singh on Monday said the Centre’s Ujwal Discom Assurance Yojna (Uday) was not a failure as it reduced average commercial losses of distribution companies. A new scheme for the revival of utilities may be announced in the Union Budget this Saturday, he said.

ET had earlier reported that the government was considering a grant of more than Rs 1.1 lakh crore to state power distribution companies under a new bailout scheme that would mandate discoms with high losses to either privatise operations or appoint distribution franchisees and invest in upgradation of infrastructure.

The government expects to spur about Rs 3 lakh crore of investments in the distribution sector through the latest discom restructuring scheme that it claims to be different from three previous initiatives. “The scheme is reform and result-oriented, where the distribution companies will invest first and get money only when they perform,” a senior government official had said.
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