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Business News/ News / India/  Financial discipline key requirement for states to avail power from unallocated quota
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Financial discipline key requirement for states to avail power from unallocated quota

The union power ministry has said that timely payment of announced subsidies on tariffs by states and non-creation of regulatory assets would be among the key areas of scrutiny before allocation of the non-allocated power.

The Ministry of Power allocates power generation capacity to states from time to time from its pool of unallocated quota in Central Generating Stations . Premium
The Ministry of Power allocates power generation capacity to states from time to time from its pool of unallocated quota in Central Generating Stations .

New Delhi: States adhering to power sector financial discipline will be given priority in allocation of power from the unallocated quota in central generating stations (CGS), according to an official order.

In a directive to the states, the union power ministry has said that timely payment of announced subsidies on tariffs by states and non-creation of regulatory assets would be among the key areas of scrutiny before allocation of the non-allocated power.

The move comes in the backdrop of worsening financial health of discoms, who in turn have delayed payments to generation utilities.

As per the order, certain aspects will be examined whenever a request will be received from any state/union territory (UT) for allocation of power from the unallocated quota of Central Generating Stations, the order dated March 31, 2023, said.

The ministry will take into account non-creation of regulatory assets and timely payment of subsidy declared, if any, in the consumer tariffs by the state government to distribution utilities.

Lastly, whether any tax/cess has been imposed by the state concerned particularly on hydro-power or on renewable energy projects which have the potential to obstruct the inter-state flow of electricity, it said adding “allocation of power to a state/UT would be strongly disincentivised if it is found violative in any of the above criteria."

The Ministry of Power allocates power generation capacity to states from time to time from its pool of unallocated quota in Central Generating Stations (CGS). Priority will be given to the allocation of such power from unallocated quota to such states which adhere to financial discipline and refrain from the imposition of tax/duties on flow of power to other states, the order said.

According to the portal PRAAPTI (Payment Ratification And Analysis in Power procurement for bringing Transparency in Invoicing of generators), the total outstanding dues of discoms stood at 62,681.68 crore in January, 2023, which included 25,526.42 crore overdue amount, that was not cleared even after 45 days of grace period offered by generators.

In January 2022, the total outstanding dues of discoms stood at 1,21,030 crore, which included the total overdue amount of 1,01,357 crore.

Power producers give 45 days to discoms to pay bills for electricity supply. After that, outstanding dues become overdue and generators charge penal interest on that in most cases.

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Published: 06 Apr 2023, 05:27 PM IST
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