New Delhi: Customers rushed to pay electricity bills in old currency notes in the days after the demonetisation move, helping power utilities clock an aggregate 13.6% increase in collections between 10 November and 15 December.
According to information collated by state-owned Power Finance Corporation (PFC) and reviewed by Mint, total collections by India’s 55 electricity distribution firms or discoms during the period was Rs25,116.86 crore—Rs3,007.57 crore more than the Rs22,109.29 crore collected a year ago. Interestingly, of the total collections, Rs2,875.42 crore was paid to settle arrears.
Prime Minister Narendra Modi on 8 November invalidated Rs500 and Rs1,000 currency notes, which made up 86% of the currency in circulation by value, as part of his government’s fight against black money, counterfeiting and terror finance. However, power utilities were allowed to accept payments in old Rs500 notes till 15 December. (In the case of utilities in the national capital region, there is 10-year-old cap of Rs4,000 on cash payments).
Some discoms saw a sharp spike in collections, as high as 251% in the case of North Eastern Electricity Supply Company of Odisha and a 204% jump in collections for North Bihar Power Distribution Company. Also, Tamil Nadu Generation and Distribution Corporation and Assam Power Distribution Company Ltd saw a 97% increase in collections each.
“There has been a sharp jump in the collections during the period and brought some relief to the discoms which have been under huge financial distress,” said a government official, requesting anonymity.
Mint reported on 25 November about power distribution companies becoming unexpected beneficiaries of the move to demonetise large currency denominations with consumers rushing to pay their dues in old Rs500 and Rs1,000 notes.
“The collections by the discoms during the demonetisation period was good as the arrears have been paid,” said a senior PFC executive, who too requested anonymity.
Ashok Haldia, managing director and chief executive officer of PTC India Financial Service Ltd, a lender to power sector said that UDAY has in general had a positive impact on the financial health and liquidity conditions of discoms. The payment track record of these has improved post UDAY, excepting of a very few. One needs to, however, wait for some more time for UDAY to impact performance improvements of discoms on a sustainable basis, said Haldia.
State electricity boards have accumulated losses of around Rs3.5 trillion as on 31 March 2015, according to a second central government official, who too asked not to be named.
Discoms are making turnaround efforts under UDAY, a debt restructure and efficiency improvement scheme launched in November 2015. UDAY mandates strict vigil on the finances and operations of SEBs.
Queries emailed to the spokespersons of PFC and India’s power ministry on 26 February remained unanswered.