Centre sends directives to power utilities amid fund crunch | Economic Times

The Union government has directed central power utilities and grid management authority Posoco to encash bank guarantees of state distribution companies that delay February bill payments, regulate their electricity supply and invoke tripartite agreements to make states liable in case of continuing default, people aware of the development said.The directions – coming at a time when most states are already facing a fund crunch – could result in long hours of load shedding in several places just ahead of summers when the country is expected to log peak demand of about 220 gigawatts.Electricity bills become due after 45 -60 days of being raised.Government data showed that discoms’ overdue amount till January stood at ?1,25,478 crore.In its directions to central power producing companies NTPC, NHPC, Damodar Valley Corporation, THDC India, SJVN Ltd, Neepco, and Neyveli Lignite Corp, transmission utility Power Grid Corp, Solar Energy Corp and Posoco, the Union power ministry has sought strict enforcement of its July 2019 order on Letter of Credit, sources said.Central PSUs sparingly invoked bank guarantees or curtailed electricity supply to defaulting discoms. Sources said private power plants are reluctant to exercise these options as they fear of arm twisting by state distribution companies in making payments.The power ministry has expressed anguish that the state discoms are not making payments despite support from the central government’s ?1,20,000-crore liquidity infusion Atmanirbhar Bharat package.“The bank guarantees have to be invariably invoked after 45-60 days,” a senior government official said. “The power supply should be restored only if the adequate bank guarantees are being opened and maintained by the distribution companies.”The power ministry has asked the CPSUs to offer instalment plan for payment of dues accumulated before February.“Failure on part of discoms to pay the instalments will result in regulation of power supply and invocation of tripartite agreement between central PSUs, state government and the RBI (Reserve Bank of India) to make the state governments liable for payment,” he said.By invoking the agreement, the Centre can ask the RBI to debit the amount from budget allocated to the state.