Payment security mechanism for power generating companies on the agenda for 2022

A greater payment security mechanism for power generation companies to ensure timely payouts for supply of electricity will be in focus in 2022 as stricter rules are on the anvil for 24×7 power supply amid discoms’ outstanding dues at a whopping Rs 1.56 lakh crore.

Mounting outstanding dues of distribution companies (discoms) to electricity generation companies (gencos) have been a perennial issue affecting the entire value chain in the power sector and are also a hindrance for the ambitious goal of 24×7 power supply across the country even when the payment for coal is made in advance.

The situation persists despite the fact that discoms’ dues become overdue after 45 days of generating bills and they also have to pay penal interest on the overdue amount in most of the cases to gencos.

”We have put in place rules and procedures for ease of doing business and ease of living. As a result of the reforms, our sector is poised for greater growth and more reforms are on the anvil in the next year. Some rules, we will come out this month (for) giving greater payment security, putting in place a greater payment security mechanism (for gencos),” Union Power Minister R K Singh told PTI.

According to him, the power sector has shown strong growth in demand in 2021 as it is 14 per cent higher than the demand in the previous year.

“This increase in demand is indicative of the fact that our economy is recovering and it is also indicative of the fact that the 28 million new consumers we have added are adding more appliances,” he pointed out. The highest all India demand for power stood at 2,00,570 MW on July 7, 2021. “Despite the increase in cost of coal, railway freight etc, we have kept (limited) the hike in tariff (mainly NTPC) by four paise per unit. In fact, the price of coal and railways freight have gone up by almost 40 to 45 per cent in the past six years,” he said.

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