Discom waiver: Interest burden on power producers seen rising to Rs 8,500 crore

As a result of higher short-term loans which power generators (gencos) are expected to take to make up for the cash shortfall stemming from the government-sanctioned payment delays by state-run electricity distribution companies (discoms), incremental interest cost on the utilities’ working capital is seen to be Rs 7,500-8,500 crore.

According to a recent report by ICICI Securities, the higher interest burden “will be partially/fully passed on to the discoms”. The research firm noted that CPSU power gencos such as NTPC will be able to recover higher expenses owing to its “cost plus” tariff structure, but the retrieval process for private power plants would depend on the provisions of their respective power purchase agreements on a case-to case basis.