The total outstanding of state-owned power distribution companies cross the Rs.1-lakh crore mark, as of February 28, 2022.
According to a recent written reply by Union power minister, R.K. Singh, in the Rajya Sabha, the total outstanding dues of state-owned discoms stood at Rs.1,00,987 crore as of February 28, 2022, rising steadily from Rs.98,545 crore as of January 31, 2022 and Rs.95,717 crore, as of December 31, 2021.
These dues were payable to various classes of power generators including Central public sector companies, independent power producers (IPPs) and renewable energy generators. It may be noted that IPPs are private sector generators while most of RE generators are also in the private sector. Thus, it can be seen that the private sector, as an ownership class, accounts for around three-fourths of the total outstanding dues of state government discoms.
The written reply, dwelling on the issue, noted that the main reasons for the increase in outstanding dues payable to generating companies, and the poor financial performance of discoms are:
- tariffs are not reflective of costs
- poor billing and collection efficiencies
- non-payment of electricity dues by state government departments
- non-payment or short payment by the state government against the subsidies announced by them
All these aspects are related to deficiencies in the governance of discoms, the power minister said.
Government intervention
Speaking of Central government interventions on improving the fiscal health of discoms, Singh stated that the the Government of India has made several interventions to improve financial and operational efficiencies of DISCOMs linked to reform measures, including:
- Liquidity Infusion Scheme (LIS)
- additional borrowing of 0.5 per cent of GSDP to States linked to power sector reforms
- introduction of additional prudential norms for lending by premier lending institutions – PFC and REC
- Revamped Distribution Sector Scheme (RDSS)
- The minister cautioned that fund admissibility to states and discoms in all these measures will be conditional on their taking steps to improve their operational and financial efficiencies.
The written reply also noted that all distribution companies are continuously pursued by the generating companies and Inter State Transmission System (ISTS) licensee for payment of outstanding dues. In case of default, notices for regulation of power supply are served and Tripartite Agreement between Reserve Bank of India (RBI) and State Government is also invoked for recovery of dues.
