The Narendra Modi government is showing absolute resolve to discipline state-run electricity distribution entities (discoms) refusing to honour their payment obligations on time. On behalf of the Centre-run power producers such as NTPC, the Union power ministry has invoked the seldom-used tripartite agreements between itself, the Reserve Bank of India (RBI) and the respective state governments, to recover the power dues to the company from the state governments of Karnataka, Tamil Nadu and Jharkhand.
Pushed to the wall by the long delays and even refusals by several discoms to pay overdue payments, NTPC has been repeatedly urging the Centre to invoke the TPAs.
The facility has been sparingly used so far, as such a move strains Centre-state relations.
As per the TPAs to which RBI, the central government (through the Union power ministry) and state governments/UTs concerned are signatories, the central bank is required to deduct amounts equal to discoms’ overdues to NTPC from the accounts of state government/UT and pay it directly to the power producer. RBI is the custodian of the accounts, into which all tax devolutions from the central government flow.
At the end of August, total overdues of Jharkhand, Karnataka and Tamil Nadu stood at Rs 3,292 crore, Rs 5,240 crore and Rs 21,555 crore, respectively.
The TPA with Jharkhand has been invoked to recover overdues — payment delays of 45 days or more — of Rs 1,126 crore. As much as Rs 1,540 crore and Rs 2,458 crore are sought to be recovered from Karnataka and Tamil Nadu, respectively. As much as Rs 714 crore has already been recovered from the Jharkhand by using the TPA in August.
To recover outstanding dues, CPSE gencos have been issuing regulation notices in the recent past which have helped them recover some amounts. As FE had reported earlier, had threatened to cut supplies to the electricity distribution company of Uttar Pradesh if the bills were not cleared soon. The company had issued similar regulation notice to Madhya Pradesh September 1, after which the state paid Rs 486 crore. THDC, another CPSE power producer, has served a similar notice to Uttar Pradesh discom on August 10 and NEEPCO had issued a notice to Tripura on September 10.
As per the government’s ‘Praapti’ portal, total overdues of power plants from discoms stood at Rs 95,000 crore at August end, and of these, the overdues to private power plants stood at Rs 49,042 crore, rising by 31% on year. Over and above the overdues to private generators, unpaid late payment surcharges and unpaid payments in lieu of various pass-through costs approved by regulators under the ‘change-n-law’ clause have piled up to another Rs 49,000 crore.