Coal India’s dues from the power sector increased almost Rs 2,000 crore in the first two weeks of April to cross Rs 15,000 crore for the first time as generators are unable to pay, which will make the state firm’s cash flow negative if the situation does not change.
“Providing for working capital from internal resources may be difficult. Coal India is a zero-debt company, however, we will have to borrow funds from the market thereby increasing production cost if dues continue to mount,” a Coal India executive told ET.
He said dues of Rs 2,000 crore in 15 days were unprecedented. Almost 80% of the company’s output goes to power plants, and the biggest dues were from state-owned power firms in West Bengal, Tamil Nadu and Uttar Pradesh.
Coal India is continuing supply to state power firms despite default, as advised by the government, to give states some respite from the ongoing liquidity crisis. Distribution companies are not paying power generators, which makes them unable to pay for coal.
Coal India’s sales are also down. About 40 power plants in a few states, including Haryana, Punjab and Rajasthan, have stopped lifting coal either because they have enough stocks, or to reduce inventory cost.
Subsidiary, Central Coalfields is the worst hit. Almost all its power sector consumers are refusing to accept supplies and make payments.
Deferred payment from state-owned generators and refusal to lift coal by others have hit the company’s daily sales collections.