Outstanding dues of private power gencos to hit a four-year low: Crisil

In a boost to the Indian power sector, the outstanding dues of private generation companies (gencos) are expected to come down to a four-year low of fewer than 100 days and below the pre-pandemic levels, said Crisil Ratings in a statement on Tuesday.

This assumes significance given that the cash-strapped electricity distribution companies (discoms) are the weakest link in the electricity value chain with poor payment records not only adversely affecting power generation firms but also contributing to the stress in the banking sector.

According to a Crisil analysis of India’s 76 gigawatts (GW) of operational independent power producers (IPP) capacities, “Dues of private coal-based independent power producers (IPPs, or gencos) are expected to wind down to a four-year low of fewer than 100 days by end of this fiscal, and well below the pre-pandemic levels.”

The Centre announced loans for discoms against their receivables, as part of the ₹20 trillion stimulus. “The ₹1.35 trillion Aatmanirbhar stimulus announced in May 2020 to clear off the dues till June 2020, came in as a much-needed support,” the statement said.

“Under the stimulus, disbursements cumulating to ~ ₹1.05 trillion are expected to be provided by the end of this fiscal, of which nearly 40-45% will be to clear dues of thermal IPPs. About ₹30,000 crore has already been disbursed in the previous fiscal which arrested the rise in receivables to an estimated ~125 days as of March 2021 (compared with ~117 days as of March 2020),” the report added.

States have also been allowed additional borrowing for four years up to 0.5% of gross state domestic product (GSDP) annually, subject to carrying out specified power sector reforms.