Payment of power bills in times of coronavirus force majeure

The Union government did state on March 19, 2020, that COVID-19 epidemic can be treated as a force majeure event, subject to certain conditions. The Solar Energy Corporation of India (SECI), however, can’t be faulted for refusing to agree to state-owned discom Uttar Pradesh Power Corporation Limited’s (UPPCL’s) demand that its payment obligations be suspended, treating the corona lockdown as a force majeure event since its collections have also suffered due to the lockdown. Given some states have offered power consumers generous relaxations in payment of power bills, it wouldn’t be surprising if other discoms also try to declare a force majeure.

There is, however, a problem with UPPCL’s arguments. For one, even before the corona shock, SEBs such as UPPCL have been delaying payments to generators; this is around Rs 1 lakh crore collectively. So, it is hardly surprising that SECI finds the UPPCL argument unconvincing. Second, if a force majeure is to be declared, it has to be declared down the value-chain. That means the solar power generators have to be allowed to not pay banks the interest and principal due, to not pay their suppliers, etc; and this has to be something that is not challenged in a court of law. That has, however, not happened. If the central government wants to protect the SEBs, it has to take appropriate legal steps to ensure this is applicable down the line. Right now, its efforts are half-hearted, and more suppliers will, like SECI, reject such attempts to not pay their dues.