Overdues of Central generation companies (gencos) have dropped by nearly a third to Rs 35,314 crore in August from Rs 49,780 crore a year after the power ministry invoked tripartite agreements with defaulting states and the RBI to recover outstanding amounts and asked power plants under its wings to snap supply to utilities that failed to pay their bills on time.
Under Raj Kumar Singh’s watch, the ministry has invoked tripartite agreements with Jharkhand, Karnataka and Tamil Nadu for recovery of combined overdues of Rs 30,087 crore, taking a politically non-partisan approach in tackling one of the banes of India’s power sector.
As of August 31, Jharkhand had an outstanding of Rs 3,292 crore. The ministry recovered Rs 714 crore by invoking the tripartite agreement and has served notice for recovery of Rs 1,126 crore. Karnataka discoms had an outstanding of Rs. 5,240 crore. Recovery notices have been issued for overdues of Rs 1,540 crore. Tamil Nadu discom had an outstanding of Rs 21,555 crore and notice for recovery of Rs 2,458 crore has been issued.
Tripartite agreements are a payment security mechanism for power supplied from Central gencos to states. It is signed by a state, the ministry and the RBI. In case a state discom fails to pay its bill, it becomes the state government’s liability. The ministry can then debit the amount from the state’s account with the RBI.
Under the ministry’s direction, Central power stations also in recent months issued disconnection notices to the union territory of Jammu & Kashmir, Madhya Pradesh and poll-bound Uttar Pradesh, where the BJP has high stakes. Most of the defaulting utilities paid up, partly or fully, after the notices were served.
Government data shows NTPC as the biggest beneficiary of these measures, with overdues coming down 63% to Rs 6,939 crore in August from Rs 19,101 crore a year ago. In August alone, the country’s largest power producer saw its overdues sliding 26% from Rs 9,335 crore to Rs 6,939 crore.
Discoms, or distribution companies, get 45 days to pay their bill for power bought from gencos. After this period, the outstanding bill is designated as ‘overdue’ amount and gencos charge interest.
