The Uttar Pradesh Power Corporation (UPPCL) and its discoms are geared up to adhere to the letter of credit system for power purchases from August 1, but have kept independent power producers within the state out of the ambit of the new payment security mechanism.
Speaking to FE, a senior official of UPPCL said arrangements have been made to issue letters of credit worth Rs 2,100 crore for “inter-state power” on a weekly revolving basis, which effectively keeps both state-owned generating stations as well as private power units out of the system. The new system for providing LCs in Uttar Pradesh will, therefore, include all inter-state power that UP buys from CPSUs such as NTPC, NHPC, NPCIL, as well as Meja, which is UP’s joint venture project with NTPC, Case-I power projects, as well as solar power.
It may be mentioned that as per the clarification issued by the ministry of power on July 23, “state-owned generating stations are not covered under the order and that the bill payment for these state-owned generating stations may be decided by the respective state governments”.
Speaking to FE on condition of anonymity, a private power producer said, “Their interpretation of the circular is that intra-state power plants are not covered under the MoP order to issue LCs as payment security mechanism. And it has been learnt that the Northern Region Power Committee has also confirmed to UP that the MoP order is only for inter-state plants,” he said.
It is interesting to note that NTPC and NHPC, the major CPSUs, already have a payment security mechanism with UPPCL. Other plants that will now be covered under the new LC system are the four Case-I plants – KSK Power, MB Power, PTC TRN and RKM Power – and NPCIL, Meja Thermal Power and some solar power producers.
The private power producers that have been kept out of the ambit include Bajaj’s 1,980 MW Lalitpur Power Plant, Lanco’s 1,200 MW plant, Prayagraj Power’s 1,980 MW plant, Reliance Power’s 1,200 MW Rosa unit, GVK Hydro’s 330 MW Alaknanda plant and Bajaj Energy’s 450 MW unit.
Power dues of these six plants are to the tune of Rs 3,245 crore, with Lalitpur’s dues being the highest at Rs 1,600 crore, followed by Prayagraj’s Rs 570 crore, BEL’s Rs 550 crore, Rosa’s Rs 400 crore, GVK Hydro’s Rs 80 crore and Lanco’s Rs 45 crore.
“The UPPCL has wrongly interpreted the MoP order. The entire effort behind the Centre’s circular was to put an end to the erratic payment behaviour of discoms. It is a clear-cut order. It is sad that some states still want to look for loopholes in it and do not want to timely pay for power purchased from IPPs. Such rougue states can’t be helped”, said a power sector specialist on condition of anonymity.