Discoms’ over-dues — bills that remained unpaid for more than 60 days — have been rising almost relentlessly over the years, and spiraled 242% on year, to a level of Rs 10,500 crore by FY20 end.
Pushed to the wall by the obstinate refusal of several electricity distribution companies (discoms) to pay over-due payments, state-run power producer NTPC will soon ask the Centre for its concurrence to invoke seldom-used tripartite agreements (TPAs).
These agreements, first signed in FY02 and extended for a decade in 2016, make it incumbent on the Reserve Bank of India (RBI) to deduct the default amount from the respective state government’s accounts with the central bank.
Discoms’ over-dues — bills that remained unpaid for more than 60 days — have been rising almost relentlessly over the years, and spiraled 242% on year, to a level of Rs 10,500 crore by FY20 end. Discoms of Uttar Pradesh, Karnataka, Telangana and Jammu & Kashmir/Ladakh are the largest defaulters, with their dues to NTPC for power purchased being 80% of the total.
“NTPC is exploring all the possible options (to get the dues owed by discoms cleared), including approaching GoI for invoking the provisions of TPA”, the company told FE in response to a query in this regard.
The facility has never been used by NTPC, as the Union power ministry advised it against its invocation.
As per the TPAs (29 in number) to which the RBI, the central government (through Union power ministry) and state governments/UTs concerned are signatories, the central bank is required to deduct amounts equal to discoms’ over-dues to the NTPC from the accounts of state government/UT and pay it directly to the power producer. The RBI is the custodian of the accounts, into which all tax devolutions from the central government flow.
Of course, if the TPA provision is really enforced, the state governments, which are in a major financial crisis at this juncture, would be hit badly.
Usually, the country’s largest power generator sends out regulation notices to discoms, to force them to clear the dues. As FE reported earlier, NTPC had notified the discoms of a host of states, including Uttar Pradesh, Bihar, Odisha, Telangana, Andhra Pradesh and Karnataka, of curtailing power supply from March 10, if the bills are not cleared soon. As per these notices, reviewed by FE, the company has repeatedly reminded the states to clear the bills, but to no avail.
“Subsequently, based on the commitments against outstanding dues and in view of the prevailing medical emergency on account of Covid-19, NTPC deferred those notices,” the company told FE. “However, intense follow-up is continuing (with the states),” it added.
Apart from following up with discoms for liquidating the dues, the company is also exploring all the other options like borrowing from the market to fill the liquidity gap, stemming from payment defaults.
Overall, discoms dues to power producers across India, including the private-sector units, stood at a staggering Rs 90,577 crore at the end of March 2020, up 41% from a year earlier. About 88% of these (Rs 79,829 crore) were ‘over-dues’. The total due amount would be even higher if the current unpaid invoices of major power players such as Adani Power and GMR Energy are counted. To ensure uninterrupted power supply in the middle of the country-wide lockdown to contain the outbreak of the coronavirus, the Union power ministry, in late March, had relaxed payment norm for discoms and asked NTPC not to curtail supply to the states even if the discoms don’t pay up.