However, the discoms are yet to step up electricity purchases from the open market to meet their power shortfalls.
Four statesRajasthan, Haryana, UP and Tamil Nadu, which accounted for more than 60% of R1.9 lakh crore debt of the state power sector estimated as at the end of March last year have completed restructuring their discom loans, inspiring confidence in banks and financial institutions to resume lending to them.
Besides, these states have also hiked electricity tariffs by 20-37% since 2012 to access the benefit of financial restructuring plan (FRP) offered by the Centre, which has led to a sizeable increase in their discoms revenues. Significantly, the FRP stipulates timely revision of tariff by discoms to meet their expenditure-revenue gap in a time-bound manner.
Kameswara Rao, leader, energy utilities and mining, PWC said: Judging from discoms' payment pattern, it appears that their cash flow position has materially improved.
Salil Garg, an analyst with India Ratings, a credit rating agency, concurred. Implementation of FRP by some states has not only improved their discoms' cash flows but has also proved positive for utilities' operations as they are required to revise tariffs on a regular basis, Garg told FE.
Sources said after restructuring its debt, UP Power Corporation Ltd (UPPCL) has cleared entire R750 crore of power purchase dues to PTC India. The payment was due for more than a year. UPPCL has also started clearing its dues to NTPC Vidyut Vyapar Nigam (NVVN) and Lanco Infratech. NVVN sources told FE that the UP discom has cleared entire dues to the company. Lanco Infratech's total receivables on account of power supply to discoms have come down to R2,939 crore in the second quarter from R3,285 crore in the first quarter. Of this, R250 crore came from UPPCL alone, company sources said.
Industry sources said after recast of their debts, Tamil Nadu and Rajasthan discoms have also become more regular in making payments for power purchased from traders. Tamil Nadu Generation and Distribution Corporation (Tangedco) has paid R250 crore out of R600 crore owed by it to PTC India. NVVN and Lanco Infratech executives also expressed satisfaction at the regularity of payment from Tamil Nadu and Rajasthan discoms.
During April-October, Tamil Nadu, Rajasthan and Haryana have seen noticeable improvement in their power supply. However, UP continues to battle with high power deficits even after restructuring its discom's loans. But despite the state facing peak power shortage to the tune of 13.9% during the period, its discom did not step up its power purchase from the spot market. The discom also did not bother to take advantage of the low price of R2.5 a unit at Indian Energy Exchange, (which accounts for 97% of electricity volume traded through exchanges in India), compared with the average price of R3.5 under long-term contracts. UPPCL purchased 311 million units of electricity from the IEX during the period, just 1% higher than the quantum bought by it a year ago. Tamil Nadu's power purchase from the IEX declined 60% during this period. Haryana and Rajasthan now have surplus power and so they do not have to buy electricity from the spot market.