Non-payment of dues by discoms: Renewable energy firms in AP seek Centre’s intervention

By: |
December 29, 2020 1:30 AM

The state government had requested PFC and REC to disburse an additional amount of loan under the first tranche itself to clear the dues of renewable energy companies.

Overdue — receivables pending for more than 60 days — has increased 30% since April to Rs 2,921 crore at October-end. Overdue — receivables pending for more than 60 days — has increased 30% since April to Rs 2,921 crore at October-end.

Solar and wind power plant developers in Andhra Pradesh have sought the Centre’s intervention to clear the outstanding dues of around Rs 3,000 crore owed to them by the state-run power distribution companies (discoms).

Although the Andhra Pradesh High Court had directed the discoms to pay these power plants at a provisional rate of Rs 2.43/unit — against the Rs 4.84/unit tariff they were receiving earlier — till the disputes are resolved, renewable generation companies have complained that they have not been receiving payments regularly even at the reduced rates. Overdue — receivables pending for more than 60 days — has increased 30% since April to Rs 2,921 crore at October-end.

As much as 8,000 megawatts (MW) renewable energy capacities which have been hit by the state’s decision to revise power purchase agreements (PPAs) and power companies are seeking compensation against lower tariffs paid to them, and have pegged the under-recoveries at around Rs 5,000 crore.

The High Court had struck down the state government order on renegotiating PPAs, and instructed discoms to power plants at an interim reduced rate till the legal disputes are resolved. Some of the generators have not been paid since April, industry body National Solar Energy Federation of India (NSEFI) said.

Under the Centre’s Rs 1.2 lakh crore liquidity infusion scheme to clear the outstanding dues owed to power producers, Andhra Pradesh has been approved Rs 6,600 crore, and has received Rs 3,300 crore according to the design of the scheme where disbursals are to be made in two equal tranches. The state government had requested PFC and REC to disburse an additional amount of loan under the first tranche itself to clear the dues of renewable energy companies. In a recent letter written to Union power minister RK Singh, NSEFI said that “we request you to intervene in the matter so that immediate disbursement is made by PFC/REC to renewable energy generators having PPAs with AP discoms”.

“Even though this interim tariff provides a slight relief to the project developers, it is not enough to service debt and not receiving this interim tariff on time is jeopardising international and also domestic investments,” NSEFI’s letter, reviewed by FE, added. The state government, against the advice of the Union power ministry, had formed a committee to revise “abnormally priced wind and solar” PPAs in July 2019, saying there might have been linked with “mala fide intentions” and could have “resulted in the unjustified burden on the consumers of the state”.

Do you know What is India expected to grow 10 pc during current fiscal: NCAER Director General Poonam Gupt,FinMin releases Rs 9,871 cr grant to 17 state, Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Trade boost: India-UAE free trade agreement talks from today, deal by March
2‘One-stop shop’: Single-window approval system for investors launched
3Draft e-commerce rules: Piyush Goyal says strong feedback will help prepare robust policy