Ad-H Ad-H

Unpaid power subsidy, govt department bills keep discoms in red

Ad P
NEW DELHI: Power distribution companies (discoms) can clear their record dues to generation companies (gencos) and still be left with some moolah if the state governments released the promised subsidy and government bodies cleared their bills – just like common consumers.
State governments owed their discoms Rs 1.39 lakh crore in subsidy receivables and unpaid bills of government departments as of March 31, according to a presentation made at the national conclave of chief secretaries presided over by prime minister Narendra Modi in June.
The same presentation pegged the total overdues of discoms towards gencos at a little more than Rs 1 lakh core at the time.
Had the state governments released the subsidy receivables of Rs 76,337 crore and the government departments paid their pending bills worth Rs 62,931 crore, discoms would have been able to clear their dues to gencos and still be laughing their way to their banks with a kitty of roughly Rs 38,000 crore (rounded).
p (1)

Even at the current level of Rs 1.14 lakh crore dues to gencos, the unpaid subsidy receivables and government department bills would leave about Rs 25,000 crore with the discoms after clearing the outstanding amount.
The presentation flagged the unpaid subsidy receivables and government department bills as the “prime cause of the continuing difficulties in the power sector”.
Such large government outstandings hit revenues of discoms, who stop paying discoms on time. The discoms show the pending payments as receivables and manage their books but have to borrow at high cost to keep running their operation.
The piling dues of gencos triggers a vicious cycle upstream as generators are also forced to borrow to maintain operations since they have to pay upfront for fuel and transportation. The increased borrowings pushes many of them, especially independent power producers, into the throes of debt trap.
The presentation pointed out that the dues of Central generation or coal companies can be recovered by deducting the amounts from the concerned state’s share of taxes under a tripartite agreement among the Centre, RBI and states. But this has rarely been invoked, it noted.
The government dues to discoms also underline the poor financial condition of states, lack of accountability and political motivations of populism overwriting commitment to reforms. Government offices and bodies such as municipalities, police, hospitals etc do not pay their bills on time as they have no fear of disconnection, unlike the aam-admi.

Leave a Comment