Power producers pull plug on truant discoms

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Not just lenders but power producers too have started cracking down on financially troubled distribution companies. Not just lenders but power producers too have started cracking down on financially troubled distribution companies.
SummaryNot just lenders but power producers too have started cracking down on financially troubled distribution companies.

Mundra ultra mega power project over pending payment security issues, Lanco Power just stopped generation from its 1,200 MW imported coal-based Udupi plant, citing coal unavailability after Karnataka discoms ran up unpaid dues of Rs 1,400 crore. Since the state consumes 90% of electricity generated by the Udupi plant, it plunged into a crisis after the station halted generation. Given the risks of public disorder over massive load-shedding, the Karnataka chief minister himself had to intervene in the matter.

Since then, the plant has started generation after a coal consignment arrived from Indonesia. However, Lanco sources denied the coal shortage was deliberately created by the company to force discoms into clearing outstanding dues.

Facing serious cash flow problems, heavily-indebted discoms in states like Uttar Pradesh and Tamil Nadu have also defaulted on power purchased from traders like PTC India, NTPC Vidyut Nigam and Adani.

The combined losses of the state power sector have crossed Rs 2 lakh crore, the bulk of which has been financed with short-term loans from banks and financial institutions. The Centre has approved a Rs 1.8 lakh crore debt restructuring scheme to help improve cash flows of discoms. However, debts are yet to be recast. Meanwhile, banks have stopped lending to discoms, compounding their cash flow woes.

HIGH TENSION

* Discoms must maintain letters of credit to ensure payments to power firms

* Even when there are no dues, power co can issue the notice for not maintaining LC

* NTPC has served 90-day notices to BSES Yamuna Power, BSES Rajdhani Power

* Tata Power and Lanco Power too have issued notices to their customers

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