Despite Andhra government's help, power sector paints grim picture

The officials said it was ‘excruciating’ for the power utilities to even meet day finance needs as collections fell due to the COVID-19 pandemic. 
For representational purposes
For representational purposes

VIJAYAWADA: Despite taking steps to bring down its expenditure plus the support from the State government, the State power sector continued to present a grim picture as it has become a ‘Herculean task’ for the beleaguered power utilities to even borrow loans. 

The officials said that the Central Power Utilities (CPUs) were threatening to invoke tripartite agreement clauses to deduct dues from Central devolution if the State does not clear them.According to the latest status report prepared by the department on the financial health of the sector after repeated requests from the AP State Power Employees Joint Action Committee (JAC), the officials said that even the monthly salaries of the employees are being paid “with a lot of difficulty and adjustments”. 

“Despite the AP government releasing Rs 17,900 crore in the 2020-21 fiscal, the power sector is traversing through a difficult period in terms of finances. Obtaining loans is becoming a Herculean task. All financial institutions such as Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) are seeking government guarantee (for working capital), unlike in the past,” the report said.

While a major share of its dues are payable to state Genco, dues are to be cleared for CPUs and private generating companies. “CPUs like NTPC Ltd, SECI and Power Grid Corporation of India Ltd are seeking clearance of dues and warning of power regulation and invocation of tripartite agreement for deduction from Central devolution to the State government,” the report said. The report further informed the employees that the credit ratings of the State power utilities were poor due to their financial conditions.

The SECI sought the enforcement of the tripartite agreement for clearance of Rs 276 crore dues towards solar power generation last year. The State energy department also noted that the payment security mechanism being implemented by the Centre to ensure payments to Central power generators via letter of credit is also becoming an issue as power from CPUs is not being despatched if there is any problem with the letter of credit.

The officials said it was ‘excruciating’ for the power utilities to even meet day finance needs as collections fell due to the COVID-19 pandemic. 

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