‘Clear dues immediately’: Centre raps UP for ‘discriminatory’ behaviour towards independent power producers

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August 14, 2020 5:15 AM

According to reliable sources, Central officials also said that while the Centre’s Atmanirbhar Bharat scheme is all about rebuilding investor sentiment, the state’s move is diametrically opposite and would “create an atmosphere of distrust and destroy investor sentiment.”

However, while the UPPCL had cleared the first tranche of the dues to all the CPSUs, PGCIL, the cogenerators and RE generators, it released only a paltry 12.5% of the dues to the IPPS. However, while the UPPCL had cleared the first tranche of the dues to all the CPSUs, PGCIL, the cogenerators and RE generators, it released only a paltry 12.5% of the dues to the IPPS.

Days after the Uttar Pradesh Power Corporation (UPPCL) wrote to the Ministry of Power (MoP) seeking its “appreciation” and “support” for the “innovative approach” of forcing independent power producers (IPPs) in the state to offer “rebates” to get their overdues cleared, the Centre has turned down the proposal and asked the state utility to clear the remaining payments of the IPPs forthwith.

Taking strong objection to the “unfair” and “discriminatory” approach of UPPCL as far as clearing the payments of private power producers was concerned, senior officials of the Ministry of Power are said to have told the UPPCL top brass that this behaviour does not behove of a sovereign entity.

According to reliable sources, Central officials also said that while the Centre’s Atmanirbhar Bharat scheme is all about rebuilding investor sentiment, the state’s move is diametrically opposite and would “create an atmosphere of distrust and destroy investor sentiment.”

Uttar Pradesh has received nearly Rs 21,000 crore under the Centre’s Rs 90,000-crore liquidity infusion under the Atmanirbhar Bharat scheme to clear the outstanding dues owed to generating companies (Gencos) including IPPs as on March 31. As per the scheme, the funds from PFC-REC are to be disbursed to the state in two equal tranches and similarly, the dues to the gencos are to be cleared in two equal instalments.

However, while the UPPCL had cleared the first tranche of the dues to all the CPSUs, PGCIL, the cogenerators and RE generators, it released only a paltry 12.5% of the dues to the IPPS. For the remaining, it came up with the unique proposal that the IPPs first offer “rebates” and then get their remaining dues cleared. For that, it had even set up finalised an “online and transparent bidding process” which would enable the IPPs to get upto 75% of their dues in the first tranche of the loan depending on the rate of rebate they offer.” Those IPPs who did not want to offer any such rebate would ultimately get paid in proportion to their dues outstanding in the second tranche of the loan.

The state had argued that since CPSU power utilities have offered discounts to discoms in the light of the crisis induced by the coronavirus outbreak, IPPs too, ought to do the same. And since none of the IPPs had agreed to the UPPCL’s request, it has come up with this scheme. It may be mentioned here that the ministry of power had advised CPSU utilities to offer a one-time rebate of 20-25% on fixed charges to the state-owned discoms. Accordingly, NTPC has offered a discount of Rs 1,363 crore to the discoms across the country.

Interestingly, all of this was conveyed by the UPPCL to the IPPs by word of mouth and there was no official communication about the proposal. Clearly, none of the IPPs agreed to the proposal as they considered it to be downright “discriminatory” and “unfair” and felt that the state government, which is a sovereign power, was trying to arm-twist the industry like the mafia.

“It is an irony that generators have to participate in a bidding to offer rebates to recover their own outstanding dues. This is a new low in which there is no sanctity of contracts. Which investor, foreign or domestic, would want to enter into these types of contracts?” an official of a private power company asked on condition of anonymity.

Another private generator went to the extent of saying that UP had scant regard for “fair play” and was “behaving like a rogue state.” “Among all states, UP is always the only one to set the wrong example of bad behaviour,” he said.

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