Latest News | Discoms' Outstanding Dues to Power Generation, Transmission Cos to Rise to 1.25 Lakh Cr in May: Report

Mumbai, Jul 1 (PTI) Owing to lower recoveries from consumers during the months of March, April and May due to the COVID-19 pandemic, the outstanding dues of discoms to power generation and transmission companies could reach about Rs 1.25 lakh crore in May, according to Emkay Global Financial Services.

Out of the total amount of Rs 17,000 crore billed to distribution companies (discoms) in April, only 11 per cent, or Rs 1,800 crore, was paid to generation companies (gencos) and transmission companies (transcos), Emkay Global said in a report.

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"Payments as a percentage of the billed amount for a month have historically been poor. However, payments particularly deteriorated in April, owing to lower collections due to COVID-19 woes," it said.

"Also collections were impacted in both urban and rural areas, and have been extremely low, except on digital platforms where collection efficiency was as high as 85-90 per cent," the report added.

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Though the overdue for May 2020 is yet to be reported, going by the average pace, it it estimated to reach Rs 1.25 lakh crore levels, it said.

In April, the overdue reached Rs 1.05 lakh crore.

"We, however, believe that with the gradual easing of lockdown restrictions, collections as a percentage of amount billed should improve considerably from June-July as collection efficiency improved to 35-40 per cent in May," it said.

Out of the Rs 90,000 crore credit line proposed by the Centre to bail out cash strapped discoms, only 14 per cent, or Rs 12,300 crore, has been sanctioned so far as states are reluctant to provide unconditional guarantee, a condition mandatory for seeking financial assistance.

Amid the COVID-19 crisis, Finance Minister Nirmala Sitharaman had in May announced the credit line of Rs 90,000 crore to discoms through state-run PFC and REC to repay outstanding dues to generating and transmission companies, with certain stipulations.

"The implementation of the package has not been entirely smooth, and negotiations have led to a delay in execution as it comes with certain stipulations such as state governments meeting unconditional and irrevocable guarantees. This has met with resistance from some states and they are reluctant to do so as they do not have the required fiscal bandwidth," the report said.

According to the report, discoms of Tamil Nadu, Maharashtra, Andhra Pradesh, Rajasthan and Punjab have sought Rs 33,100 crore under the scheme, but only Rs 12,300 crore has been sanctioned so far.

"Even after the disbursement of these sanctioned amounts is paid to the gencos and transmission companies, the total outstanding due of discoms (in July) would remain Rs 1.1 lakh crore which is worrying," it said.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)