With payments of over ₹2,000 crore stuck with various State distribution utilities, players in the wind energy segment are knocking on the doors of Piyush Goyal, Minister of State (Independent Charge) for New & Renewable Energy, who also holds the portfolios of Power, Coal and Mines. “Delays in payments by State electricity distribution utilities or discoms are making investments unviable,” an industry player said, adding that some discoms have not made payments since September 2016 and the estimated amount could be over ₹2,000 crore. Madhya Pradesh, Maharashtra and Tamil Nadu have been identified as key defaulters, with payment delays of 9-12 months. Andhra Pradesh too figures in the list.
A senior official in the Ministry for New & Renewable Energy told BusinessLine “the issue of delay in payments has been taken up with States from time to time. We will further take it up with them.”
Driving a hard bargain
A developer said, “After delaying payments for almost a year, some of these discoms have been negotiating with developers to settle for a late payment surcharge of 7.5 per cent, as against the stipulated 15 per cent. Since developers borrow from banks at 12 per cent, developers will end up paying out of their pocket if it is brought down.” Besides, payment delays from discoms go against the Prime Minister and Central government’s vision of increasing the consumption and generation of renewable energy. Surprisingly, three of the four biggest defaulters are BJP-ruled States, another wind power developer said. A Rajasthan government official said, “The average delays are not as long as 12 months, but a delay of up to four months is there. The health of the discoms has become better and the payment dues have come down since the State has adopted the Ujwal Discom Assurance Yojana (UDAY). There may be individual cases where there are payment delays due to incomplete documentation.”
UDAY was launched by the Centre in November 2015 to ensure the operational and financial turnaround of discoms. The States have adopted this scheme to reduce the interest burden, power costs, distribution losses of discoms. The fact that dues persist even after States have adopted the scheme should sound the alarm bells for those dependent on purchases by discoms, says a power producer. Officials aware of the developments in Maharashtra said, “The discoms forced all generators to agree to lower the late payment surcharge by 50 per cent till May 31, 2017. After which, they cleared their outstanding from December 2015 to July 2016 between April and May this year.”