‘Clear dues or lose power supply’: Govt tells defaulting states

NEW DELHI: The power ministry has warned six big defaulting states to clear dues of generation companies (gencos) and Coal India Ltd (CIL) or lose access to electricity as the outstanding amounts were causing supply side strains.

In separate letters to chief secretaries of Uttar Pradesh, Rajasthan, Madhya Pradesh, Maharashtra Tamil Nadu and Jammu & Kashmir, power secretary Alok Kumar said the piling dues because of an “unprecedented inability” of their state distribution utilities (discoms) was threatening the reliability of power supply.

Tamil Nadu tops the list with outstanding of Rs 20,842 crore to gencos and Rs 729 crore to CIL. Maharashtra is next with dues of Rs 18,014 crore to gencos and Rs 2,573 crore to CIL. Maharashtra owes Rs 11,176 crore to gencos and Rs 308 crore to CIL. UP owes Rs 9,372 crore to gencos and Rs 319 crore to CIL. Madhya Pradesh owes Rs 5,030 crore to gencos and Rs 256 crore to CIL. J&K owes Rs 7,275 crore to gencos but has no outstanding against CIL as it does not have any thermal power plant of its own.

Kumar said if the utilities continue to renounce their responsibilities towards timely payments to their creditors and do not clear their past and current dues “urgently” this will have a perilous effect on power supply. The lack of adherence to basic payment discipline by the utilities is also adversely affecting new investments in the sector, he added.

All discoms taken together owe gencos a whopping Rs 1.3 lakh crore, the highest since 2017 and marking more than four-fold increase over Rs 24,910 crore which discoms owed to gencos in March that year. The dues do not include amounts disputed by discoms, a fact that makes the situation more grim.

The ballooning overdues strains the sector and underlines the challenges for the Centre’s reforms initiatives at the state level. The dues cast a shadow on the viability of gencos and underline the poor financial condition of states, their lack of accountability and populism overwriting commitment to reforms in the hope of reaping political dividend.