The Southern and Eastern Power Distribution Companies (Discoms) of Andhra Pradesh (A.P.), which are teetering, and on the brink of bankruptcy with liabilities of about ₹25,000 crore, got a little reprieve. The State government has just sanctioned about ₹4,700 crore towards clearing part of their dues to generation companies, banks and financial institutions.
However, the Discoms are expecting more such bail-outs as their debt is growing with each passing day. Meanwhile, the NTPC and some independent power producers have expressed their inability to sell power if payments are not made regularly.
No credit from Genco
The AP-Genco is not in the pink of health either to maintain power supply to the Discoms on credit basis.
While the Discoms’ debt burden is increasing, the government owes about ₹9,000 crore to them on account of subsidies borne by them.
A huge chunk of it going towards concessional tariffs given to various categories of consumers, according to official sources.
A senior official in the Energy Department told The Hindu that payments were often made under the bill discounting method to keep the Discoms afloat lest they should end up as defaulters and their financial standing deteriorate further.
With the above sanction, Discoms would be able to offload their debt to some extent while the government explored means to pull them out of the red.
The purchase of renewable energy at exorbitant costs in last five years has only compounded the Discoms’ woes.
Therefore, the government sought to bring the existing tariffs down by reviewing Power Purchase Agreements, the source said.
APSEB Engineers’ Association president M. Vedavyasa Rao said the government should basically help the Discoms in making upfront payments - though the chances of it are bleak - or facilitate issuance of letters of credit to the generating firms and discharge the obligation thereof without inordinate delays.
“Tariffs fixed by A.P. Electricity Regulatory Commission were not enough to meet the expenditure of AP-Genco. Moreover, the government departments owed a whopping ₹2,000 crore to the Discoms for the power consumed by them. If these things are sorted out, the AP-Genco and Discoms would be better placed to ward off the challenges,” he observed.