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Home News Power Sector News Discoms' dues to PSU generation firms more than double in 3 yrs

Discoms' dues to PSU generation firms more than double in 3 yrs

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DVCWith last year's restructuring package for loss-making power distribution companies yet to bear fruit, the dues that discoms owe state-owned generation firms jumped to Rs 15,792 crore last month, compared with Rs 6,200 crore in June 2010. The mounting dues are due to the discoms' bad financial state coupled with contractual disputes between generating companies and state power utilities or departments. If the dues continue to grow at the current pace, it could severely dent the expansion plans of state-owned energy firms.

Damodar Valley Corporation (DVC), which runs power plants with a cumulative capacity of over 2,800 Mw in Jharkhand and West Bengal, alone accounts for over a third - Rs 5,900 crore - of the dues. Lignite miner and power generator Neyveli Lignite Corp (NLC) stands second with Rs 3,108 crore dues, followed by Hydro and thermal power majors NHPC and NTPC Ltd with dues of Rs 2,047 crore and Rs 1,309 crore, respectively.

Other state-owned firms which are struggling to retrieve their revenue stuck with discoms include Powergrid Corporation of India (PGCIL), North-Eastern Electric Power Corp (NEEPCO), Nuclear Power Corporation (NPCIL), Bhakra Beas Management Board (BBMB) and THDC India Ltd.

DVC had said last month it might be forced to curtail the quantum of power being supplied to Delhi discom BSES Yamuna Power Ltd (BYPL), whose outstanding dues as on 31 August stood at Rs 443 crore. A BYPL spokesperson told Business Standard the dues accrued in the absence of a cost-reflective tariff, which resulted in the build-up of Rs 19,500 crore worth of regulatory assets.

"Delhi discoms' cost of buying power has increased by around 300 per cent since 2002, on which we have no control. Correspondingly, the retail tariff has risen by only around 70 per cent, resulting in accumulation of a large revenue gap. The power purchase and interest costs now account for 100 per cent of BYPL revenues," said the spokesperson. BYPL has been sourcing 228 MW power from DVC, which has now been curtailed in full. However, the regulation of power supply has not impacted BYPL consumers as the company has made alternate arrangements, according to the spokesperson.

For the largest power generator NTPC, the dues are the result of a historic dispute between the Centre and the Delhi government over who would pay the dues for electricity consumed by Delhi Electricity Supply Undertaking (Desu), the erstwhile power distributor in Delhi. With the Delhi government arguing the Centre should pay because Desu was then under the administrative control of Municipal Corporation of Delhi (MCD) under the Union home ministry, the issue languished for 15 years. Interest accumulated over the years to Rs 474 crore now.

For hydro major NHPC Ltd, the dues have accumulated owing to a dispute with the Power Development Department (PDD) of Jammu & Kashmir. The department argues NHPC deprived the state of its revenue when it bypassed PDD to procure electricity used for construction of two projects in the state in the past. With NHPC contesting the allegation, PDD withheld over Rs 650 crore of its regular power purchase payments to the public sector unit.

Experts say the dues may not appear high when seen as a percentage of the total revenue base of the distribution firms nationally, which is expected to be around Rs 3 lakh crore in the current financial year. "The main reason for the dues is the precarious financial health of some distribution firms. A few states such as Rajasthan and Uttar Pradesh have traditionally been laggard in payments to suppliers," said Debashish Mishra, senior director, Deloitte. He told Business Standard the situation would improve as more and more states sign up for the debt restructuring programme of the power ministry, "which would lead to improved finances and paying ability of discoms".

Source - Business standard


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