Trading by 27 discoms barred over genco dues

The total dues of these discoms amount to 5,000 crore with discoms in Telangana owing the highest amount of 1,380 crore.

Rituraj Baruah
Updated18 Aug 2022
The development follows the introduction of the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022, which were announced in June.
The development follows the introduction of the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022, which were announced in June.(AP)

Power System Operation Corporation (POSOCO) has barred power distribution companies of 13 states from buying and selling power on the exchanges starting 19 August, due to delay in their outstanding dues to generation companies (GENCO). 

The states where discoms have been barred from trading power on the exchanges are Chhattisgarh, Maharashtra, Madhya Pradesh, Karnataka, Andhra Pradesh,  Telangana, Tamil Nadu, Jammu and Kashmir, Rajasthan, Bihar, Jharkhand, Manipur and Mizoram.

In a letter to the power exchanges seen by Mint, POSOCO outlined the names of the states and their respective discoms and said: “As per information received from PRAAPTI portal regarding outstanding of payments, the buy and sell transactions in all products of power market for the following discoms shall be entirely restricted till further notice from the delivery date of 19.08.2022.”

The total dues of these discoms amount to 5,000 crore with discoms in Telangana owing the highest amount of 1,380 crore.

The development follows the introduction of the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022, which were announced in June.

As per the rules, in case of non-payment of dues, by the distribution licensee or other user of transmission system, even after two and half months from presentation of bill by the generating company or transmission licensee or trading licensee, or in case of default in the payment of instalments, “short-term access, for sale and purchase of electricity including in the power exchange shall be regulated entirely”.

 “On payment of outstanding dues, the regulation of access under this rule shall end and it shall be restored at the earliest, but not later than two days,” said the gazette notification on the rules.

On 16 May, Mint reported that power generation companies (gencos) have started regulating power supply to distribution companies (discoms) which have deferred paying their monthly dues, with supplies to those in Meghalaya and Sikkim cut by a quarter. The latest update on Praapti website showed that discoms in both the state have cleared their dues. 

Under the new ‘late payment surcharge’ (LPS) rules, in case a discom does not pay the outstanding dues two-and-a-half months after the generation of the bill, the genco will supply only 75% of the contracted power to the distribution licencee. The remaining 25% may be sold by the genco through power exchanges.

Commenting on the latest move by POSOCO, Arindam Ghosh, Leader, Power Advisory, Nangia Andersen LLP said: “This is definitely a good move, but enforcement can only be accomplished if it is properly planned. POSOCO should have anticipated the implication of abruptly barring the utilities.”

The government has accelerated its push for state discoms to pay dues to gencos which amount to around 1.5 trillion. On 30 July, Prime Minister Narendra Modi urged states to clear their dues to power generation companies to help ensure firms‘ operational viability which in turn would help them meet the country’s energy demand. Total dues in the country’s power sector including to gencos and discoms amount to 2.5 trillion.

On 5 August, Mint reported that state-run Power Finance Corp. Ltd PFC) and its subsidiary, REC Ltd, are expected to lend up to 1.45 trillion in total to state-run discoms under the Union government’s ambitious one-time settlement scheme.

Queries sent to POSOCO, ministry of power, Indian Energy Exchange and Hindustan Power Exchange remained unanswered till press time.

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