UDAY Targets: Discoms hit by payment delay

By: | Updated: May 25, 2018 5:14 AM

The aggregate technical and commercial (AT&C) losses of state-run discoms in the country stood at 23% in Q3FY18 versus the FY18 target of 18.8%

State government departments’ staggering dues to the country’s public sector power discoms — Rs 39,442 crore in aggregate at last count, which is more than the discoms’ combined financial losses in FY17 or around 10% of their total turnover in the year — have made their task of meeting the key UDAY targets more difficult.

The aggregate technical and commercial (AT&C) losses of state-run discoms in the country stood at 23% in Q3FY18 versus the FY18 target of 18.8%; the AT&C figure would have been lower by close to 1 percentage point if the dues from state departments were received in time. Delayed receipts reflect adversely on AT&C figures because these deflate the revenue against the units of electricity sold.

Non-payment of bills sixty days after the due date is treated as default.

A reduction in the gap between the average cost of supply and the revenue realised (ACS-ARR) — another key target set under the Union government’s Ujwal Discom Assurance Yojana (UDAY) for revival of discoms — is also happening at a slower-than-targetted pace due to the state government departments’ mounting dues to the discoms. As for the ACS-ARR gap, the target was to reduce it to 25 paise per unit by FY18, but the gap in Q3FY18, the latest quarter for which data is available, was 28 paise per unit. Of course, the ACS-ARR gap was much higher at 47 paise in Q3FY17.


The state departments, patronised by the political dispensations, are not under any great pressure to pay up.

Besides, there are also a lot of disputes pending before courts on the amounts demanded by discoms as the public sector buyers of electricity complain of wrong billing by the discoms. The interest on the working capital loans taken by the discoms to compensate for the revenue shortcoming arising out of payment dues from public sector entities is around Rs 4,000 crore annually; this outgo will translate into one percentage point of AT&C losses.

As reported by FE earlier, some discoms are also burdened by delayed subsidy disbursal by the state governments. Chhattisgarh discom is awaiting about Rs 1,800 crore from the state government out of the total booked subsidy of Rs 3,000 crore for FY18. Apart from the unrealised revenue of Rs 907 crore from state departments, Punjab discom is also yet to paid subsidy of Rs 5,000 crore.

Uttar Pradesh discoms are burdened with the highest dues (Rs 10,722 crore) from the state’s government departments, followed by Maharashtra Rs 5,600 crore), Kerala (Rs 4,910 crore), Telangana (Rs 4,430 crore) and Andhra Pradesh (Rs 3,803 crore). Among these, the AT&C losses in Uttar Pradesh and Kerala had increased in FY17, partly due to the rise in outstanding dues.

Overall losses of discoms under UDAY have decreased from Rs 51,590 crore in FY16 to Rs 35,656 crore in FY17, thanks partly to the scheme.

Power minister RK Singh has recently said there would be no going back on the government’s plans to inculcate discipline in discoms. Cross subsidy would be capped at 20% effective January 2019 and discoms would be denied compensation for AT&C losses above 15% in tariff orders from the next fiscal, the minister said, adding that, starting FY20, gratuitous load-shedding would invite penal action.

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