Power distribution companies dues still rising despite Government’s liquidity support

Under the programme, discoms were to be extended Rs 90,000 crore in loans by state-run financiers PFC Ltd. and REC Ltd.-subsequently enhanced to Rs 1.2 lakh crore.

Published: 05th December 2020 11:17 AM  |   Last Updated: 05th December 2020 11:17 AM   |  A+A-


For representational purpose.

Express News Service

NEW DELHI:  Despite the government’s up and running liquidity infusion programme, the pending dues of power distribution companies (discom) remain on a steady upward march. According to data from the Ministry of Power, discoms owed power generators (gencos) Rs 1,25,743 crore as of the end of October 2020, 34.4 per cent higher than at the same point last year and Rs 1,068 crore more than at the end of September 2020. 

The power sector has been among the hardest hit by the economic crisis triggered by the pandemic-demand tanking as much as 30 per cent at the peak of the nationwide lockdown in April.

Much of this lost demand was in the lucrative industrial and commercial segment, as factories and shops downed shutters, and discoms were left with the low-margin, heavily subsidised household sector. The subsequent impact on cash flows is being reflected in the steadily mounting dues. 

The Centre’s liquidity infusion programme, announced in May as part of the relief package, has worked to mitigate the trend but hasn’t reversed it. Under the programme, discoms were to be extended Rs 90,000 crore in loans by state-run financiers PFC Ltd. and REC Ltd.-subsequently enhanced to Rs 1.2 lakh crore. As of the end of September 2020, the two had sanctioned loans worth Rs 1.18 lakh crore, of which Rs 31,100 crore had already been disbursed to 11 states. 

This infusion has been reflected in a sharp rise in discoms’ payments to gencos. Data from the Ministry of Power’s PRAAPTI portal shows that in the April-May quarter, discoms paid an average of just Rs 6,394 crore per month to gencos, less than half the Rs 13,550 a month paid the previous quarter and Rs 12,884 crore a month paid between October-December 2019. Assisted by the loans, however, this number rose to Rs 13,327 crore a month in the June-September quarter and Rs 11,834 crore in October 2020. 

But while demand has also recovered to pre-Covid levels, discoms are struggling to pare down the debt. According to the data, discom dues to gencos soared from Rs 96,170 crore at the end of March 2020 to Rs 121,143 crore by the end of June. And while the Centre’s liquidity package slowed down the rate of debt accumulation beginning July, it has not halted or reversed the trend-dues rising from Rs 1.2 lakh crore at the end of July to Rs 1.257 lakh crore at the end of October. 

Discom executives say this is due to the slow recovery of bill collections in some areas and delayed subsidy payments by state governments. “Cash flows are still weak. and it will take a while to return to normal,” said a senior state discom executive.


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