Discoms need to pay dues on time: Union Minister RK Singh

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October 26, 2021 5:00 AM

“Power plants owe huge quantum of money to Coal India (CIL), so naturally, it (CIL) gets into difficulty,” Singh said. He added that the Union power ministry would soon write to the state governments and discoms, asking to clear their dues to gencos — Rs 75,000 crore at last count — at the earliest.

The supply deficit subsequently moderated to 58 MU on October 13, 34 MU on October 19 and further to 8 MU on October 24.The supply deficit subsequently moderated to 58 MU on October 13, 34 MU on October 19 and further to 8 MU on October 24.

Unless the state-run electricity distribution entities (discoms) mend their ways and pay power companies on time, the latter may be pushed to defaulting on coal payments, and fuel crises like the current one might recur, Union minister for power, new and renewable energy RK Singh said on Monday.

“Power plants owe huge quantum of money to Coal India (CIL), so naturally, it (CIL) gets into difficulty,” Singh said. He added that the Union power ministry would soon write to the state governments and discoms, asking to clear their dues to gencos — Rs 75,000 crore at last count — at the earliest.

Currently, coal stock at power plants is 8.1 million tonne (MT), up from 7.5 MT on October 19. Low fuel stock levels at power plants in recent weeks are being attributed to higher coal usage in July-September, power plants not stocking enough before the monsoon and low alternative supply of coal. The fuel deficit, the gravest in recent years, resulted in electricity supply shortage rising to as high as 114.5 million units (MU) on October 7.

The supply deficit subsequently moderated to 58 MU on October 13, 34 MU on October 19 and further to 8 MU on October 24.

The minister said some central government-owned generating companies could also not pay CIL because they have not been paid (by discoms) for the power supplied. Total unpaid dues to CIL by the Central sector and state-run power plants is around Rs 16,000 crore at present. Against this, discoms’ dues to generating companies is around Rs 75,000 crore, Singh said.

“How do you expect them (gencos) to pay for coal, railway freight, service their loans, pay workers’ salaries? This is not sustainable,” the minister said.

While private power plants have to pay for coal in advance, the case is not the same for gencos owned by the Central and state governments. In the run-up to the recent coal crisis, many states were receiving lower coal supply because of their outstanding dues to CIL. The government recently said that Maharashtra, Rajasthan, Tamil Nadu, Uttar Pradesh and Madhya Pradesh have legacy issues of heavy dues of coal companies.

With the government taking several steps to address the issue of coal shortage at numerous power plants across the country, other industries — which run captive electricity generation units to supply electricity to its factories — have complained about the fuel crisis brewing in the sector. “At this juncture an acute shortage of coal on the back of supply constraints is hitting aluminium manufacturing hard and the industry is struggling to sustain operations with alarmingly depleted coal stocks of only 1.5-3 days as compared to the prescribed level of 15 days,” the Indian Industrial Value Chain Council said on Monday.

The government stated earlier that more than 0.25 MT of coal is being supplied to the non-power sectors on a daily basis. As per industry sources, this could meet only half the fuel requirement of the captive power plants.

Sources said that such industries are not running at full capacity and are sourcing more than 1 GW power from the grid and exchanges. Coal supply shortage has also pushed the industry to resort to import of the fuel, even as international coal rates doubled in a year to around Rs 12,000 per tonne.

The latest Rs 3 lakh-crore revival scheme for debt-laden, loss-making discoms— approved by the Cabinet in June — is to be implemented in the five years through FY26. While the priority of the scheme is metering electricity supply to consumers to reduce pilferage, discoms will also have to undertake infrastructure creation such as feeder separation, implement digital technologies and provide armoured and aerial bunched cables in high loss areas.

The aim is to bring down aggregate technical and commercial (AT&C) losses to 15% from the current level of 21%. The Centre is also implementing a Rs 1.35-lakh-crore loan package through PFC-REC to help discoms clear the dues to power generators.

Financial losses of state-run discoms had decreased by about 38% annually to Rs 38,093 crore in FY20, mainly through more efficient billing and improved subsidy disbursal by the state governments. However, with revenue dropping significantly in FY21 as demand from high-paying industrial and commercial consumer segments were disrupted amid the lockdowns, their losses are seen to have increased.

(A report released by Icra in March had indicated that discom losses have increased to Rs 90,000 crore in FY21, which was subsequently concurred by NITI Aayog. But the power ministry has termed such estimates as “grossly inflated”.)

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