NEW DELHI: The Centre may have enhanced its support package for power distribution companies (discom), but data from the Union Ministry of Power shows that pending dues to power generators (gencos) are rising again. As of September 30, 2020, discoms owed gencos a little over Rs 1.26 lakh crore-up 3.7 per cent over the previous month and a whopping 47.5 per cent compared to September last year.
Discom debt has been on a steady upward trajectory since long before the pandemic and subsequent lockdowns took out almost all of industrial demand. While March 2020 saw a 3.9 per cent sequential reduction, the lockdowns resulted in discoms accumulating Rs 24,344 crore in debt over the next three months. The Centre’s Rs 90,000 crore package initially arrested this rise, with dues contracting sequentially in July (-0.2%).
But, the needle has spiked again in August (1.8%) and September (3.7%). In the meantime, the liquidity assistance package (in the form of loans extended by PFC and REC) has been enhanced to Rs 1.25 lakh crore. Of this, the state-run financiers have sanctioned Rs 1.18 lakh crore in loans to discoms to date and disbursed Rs 31,100 crore to 11 states, according to Emkay Global analysts.
However, industry sources say unpaid dues could take a while to settle down, despite improving demand and collections. According to a senior state discom executive, utilities have had a hard time due to two factors: a fall in bill collections, though only marginal, and a large scale fall in industrial demand.
“Household demand rose, but this only made things worse. Industrial power tariffs are where the profits lie because household supply is heavily subsidised. These subsidies have to be paid by states to discoms, but since revenues have tanked, governments have had trouble meeting payments too,” the executive added.