Privately-run power generators, which contribute half of India’s installed capacity, are plagued with a slew of problems. These include unrealised dues from State-run distribution utilities (DISCOMs), discrimination in granting fuel-linkages and power purchase/sales agreements (PPAs), and having to cope with stiff environmental norms.
On February 27, the Association of Power Producers (APP), a body of independent power producers (IPPs), in a letter pointed to the Union Power Minister that introduction of LC-based power purchase had stopped piling up of current dues since August 2019.
However, earlier dues amounting to ₹43,170 crore remain unrealised. A majority of these dues are piled up with a handful of States like Uttar Pradesh, Tamil Nadu, Karnataka, Rajasthan, Andhra Pradesh, and Telengana. The amount is increasing progressively due to addition of late payment surcharge.
“The stress caused by the pending payments has increased to almost unsustainable levels and many projects are on the verge of becoming NPAs,” APP pointed out, and requested the government for a short-term solution, till finalisation of another bailout package.
The new bailout package will be the fourth in the last two decades. The first such package came in 2001, followed by one in 2012. The first Modi government launched UDAY (Ujwal Discom Assurance Yojana) in 2015.
Barring some exceptions, all the packages failed to discipline the State government-controlled power distribution sector.