After private thermal power producers, it is now the turn of equipment suppliers to raise their voice against non-payment of dues by Uttar Prad-esh’s five power distribution entities. The equipment suppliers, many of them MSMEs, claim the discoms’ unpaid dues to them have piled up to Rs 2,000 crore, including amounts pending for even four years.
The state’s undisciplined payment patterns have hurt smaller local industries that are facing unprecedented liquidity crunch in the coronavirus pandemic, said industry sources.
They have pushed some larger suppliers into stopping doing business with UP discoms, industry sources said.
“Most of these suppliers MSMEs with low cash reserves, and the state keeps clearing payments in very small instalments,” said RK Chugh, president of the Indian electrical equipment manufacturers’ association (IEEMA). The states discoms owes money even to small transformer repair contractors who have been worst hit by the coronavirus outbreak.
As reported by FE earlier, private power plants which have large sums yet to be received from the state discoms include Tata Power’s Bara unit (Rs 1,249 crore), Bajaj Lalitpur (Rs 3,370 crore), KSK Mahanadi (Rs 1,676 crore) and Hindustan Power’s Anuppur (Rs 1,306 crore).
While none of five discoms in the state have a satisfactory track record regarding clearing payments, equipment suppliers say that the worst experiences are faced in Varanasi, followed by Agra and Meerut. “UP discoms have the most complex system of clearing payments among all states and we were accustomed with the usual four two six months delays in receiving payments, but now the normal clearance time has spiraled to 18 months,” said Pawan Jain CEO of Kotsons which has been in transformer manufacturing for 40 years. “Seeing the irregularity in payments, we have decided not to get into business transactions with Uttar Pradesh government power departments,” Jain added.
Much of these equipment were supplied under various schemes of both the centre and the state government to upgrade the distribution infrastructure to cut down losses. While part payments for supplies under such schemes are made sporadically and with much delay, settlement of dues are much worse for supplies to projects implemented under the discoms’ own capital expenditure plans. “When we request to fast-track payments, discom officials often threat us with blacklisting us so that we cannot supply to government projects anymore and we are expected to continue supplying without getting paid,” and equipment supplier said on condition of anonymity.
Meter suppliers are waiting to receive around Rs 500 crore of balance payments for products supplied more than two years ago. The state intends to install 40 lakh smart meters by December 2020 out of which 10.3 lakh have already been installed. The state also targets to meter all 16.41 lakh un-metered consumers in the next two months. “If the outstanding is not cleared small players will not be able to buy parts and equipment and quote for new supply tenders,” said Amit Kumar, chairman of IEEMA’s energy meter division. Local meter makers are being devoid of cash at a time when they are planning to ramp up their production capacity to cut Chinese imports, as the government intends to gradually replace all the existing 270 million meters with smart meters. According to research firm Crisil, over 60% of the electricity meters, parts and accessories imported in 2019 were from China, due to lower cost of meters and components.
Independent thermal power producers have rejected Uttar Pradesh government’s proposal of settling the discoms’ dues to them contingent on the power plants offering tariff rebates for past supplies. As on March 31, the state owned Rs 17,825 crore to various power generators.