According to information available on union power ministry’s PRAAPTI portal, at the end of July, the electricity distribution companies (discoms) owe Rs 74,710 crore for the power bought from the generation companies (gencos) in the Indian power sector.
The unpaid outstanding amount was Rs 55,091 crore. This comes at a time of the ongoing crisis in discoms due to their poor financial health, which has resulted in delayed payment to generation utilities. The development happened at a time when Centre is trying to step up efforts to supply round-the-clock power to all.
The growing crisis is worried that may add stress of non performing assets (NPAs) in the banking sector, the National Democratic Alliance (NDA) government in its second term made it mandatory for state discoms to offer letters of credit (LC) as part of the payment security mechanisms in power purchase agreements (PPAs). This was effective from 1 August and was done to ensure timely payments by states to electricity generation utilities.