Centre gives relief to power discoms

| | Lucknow
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Centre gives relief to power discoms

Sunday, 29 March 2020 | PNS | Lucknow

In a major relief to power distribution companies (discoms), the Union government relaxed norms for payment to private thermal power generation companies.
The discoms pay their dues through payment security mechanism of Letter of Credit (LC) for ensuring timely payment to power generation companies .
“Many consumers of discoms are unable to pay their dues and this has critically affected liquidity of the discoms. This in turn has affected their financial position and ability to make timely payments to generating and transmission companies and maintaining Letter of Credit,” says an order from the Ministry of Power dated March 27.
“Considering the unprecedented and force majeure situation, it has been decided that power may be scheduled even if payment security mechanism is established for 50 per cent of the amount for which payment security mechanism is to be otherwise established contractually. This order shall be in effect till June 30, 2020,” the Power Ministry order said.
The Union government relaxed the condition to support discoms that are finding it difficult to collect payments for bills raised on consumers in light of COVID-19 lockdown.
All India Power Engineers Federation had urged Prime Minister Narendra Modi earlier this week to intervene in the prevailing crisis due to the lockdown.
AIPEF chairman Shailendra Dubey said that power engineers welcomed the step taken by the Union Ministry of Power. He said that the AIPEF had requested the Centre to issue direction to the RBI to allow state power utilities to defer repayment of principal and interests at least for three months.
As per AIPEF, power demand in the states has come down by 20-30 per cent and their major source of income from high-end earning sources like Railways, industrial and commercial consumers have been blocked due to complete shutdown.
These measures have resulted in a sudden slump in power bill collections of discoms by 80 per cent over the last few days. The sudden fall in collections has rendered the discoms unable to make daily payments not only to generators, which in turn is affecting coal payments and coal transport by Railways, but also debt servicing to banks and financial institutions.

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