Consumer indiscipline: Liquidity package fails to stem UP discoms’ dues to gencos

The Covid-19 pandemic seems to have caused a further slippage in payment discipline among electricity consumers in several states, posing a renewed threat to the financial status of distribution utilities (discoms).

Uttar Pradesh’s five electricity discoms, huddled under umbrella entity Uttar Pradesh Power Corporation (UPPCL), piled up an additional Rs 14,000 crore (40%) as over-dues to gencos during the first half of the current financial year.

As a result, their over-dues to gencos rose from Rs 34,000 crore at end of FY20 to over Rs 37,000 crore by September end, despite these entities having paid Rs 10,500 crore received as soft loan from PFC-REC under a special liquidity facility to central sector gencos and private power producers.

The Union power ministry has recently increased the size of the liquidity package to Rs 1.2 lakh crore from Rs 90,000 crore planned initially; the government and PFC-REC have also been rather quick in sanctioning funds under the scheme (`1.1 lakh crore so far).

Also, in order to help the cash-strapped discoms, the power ministry has reduced late payment surcharges, a move could potentially provide a relief of about Rs 6,000 crore annually to them.

financial express
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