Power generators can exit loss making contracts with states

The government has given freedom to the central sector power producers such as NTPC, NHPC and SJVN to sell power relinquished by state discoms to new buyers under long or short term contracts or place the surplus power on exchanges for discovery of price in the day ahead, term ahead and real time markets.

The move is expected to provide new avenues to central generating stations (CGS) who could now find buyers with better paying capacity for power relinquished by state discoms that have often been found to delay payment to power generators.

Total dues owed by electricity distribution companies to power producers have risen sharply to reach closer to Rs 1.40 lakh crore now, reflecting deep stress in the sector.

In a set of guidelines on distribution of power after the termination of power purchase agreements (PPAs), the Power Ministry has said relinquished power (the capacity that comes out of the PPAs existing with state discoms) could be sold by CGS under various avenues including tie up with another buyer willing to go in for long term, medium term (up to 5 years) or short term PPAs through competitive bidding route. This power could also be sold through power exchanges and also reallocated to willing buyers.

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