(FE)
State-run electricity distribution companies (discoms) of Maharashtra and Tamil Nadu have opposed the central government panel’s recommendation to make advance payments to power producers. The recommendation was made by a committee which was constituted by the Union power ministry ‘to look into the issue of delayed payments by discoms’ to power generators.
Delayed payment from discoms have been cited as one of the reasons behind the rising stress in the sector. This impairs the generating company’s ability to service debt and exhausts their working capital. Inability to service debt leads to lower credit ratings and higher interest rates.
According to the committee’s report, most of the stressed independent power producers (IPPs) are paying interest at 12-13% even after 4-5 years of operations. While banks estimate three month’s working capital requirement of a typical 1,000 MW power plant at Rs 980 crore, the real cost comes at Rs 1,380 crore, IPPs informed the committee.
