The Centre is likely to announce a Rs 3 lakh crore ($41 billion) package to revive regional electricity retailers in the upcoming budget. The fund allocation of Rs 3 lakh crore will focus on upgrading the infrastructure and technology of the ailing power distribution companies (Discoms) to make them more efficient and reduce their widening financial losses.
The package may focus on measures like separating power feeder grids for farmers and residential users, and installation of prepaid smart meters. The Ministry of Power has already announced that it is planning to replace 250 million conventional electricity metres with smart metres by 2022 in Indian homes under the Smart Meter National programme to stop pilferage and encourage timely payment.
The Rs 3 lakh crore package may also include measures like replacing overhead cables with special insulated wires to prevent theft.
Electricity retailers are the weakest link in the country's power supply chain, losing on average about a fifth of their revenue because of technical and commercial reasons, including loss of power supplies through theft, poor transmission infrastructure and inefficient billing and collection.
Power producers' total dues owed by the electricity retailers have increased by over 35 per cent to Rs 1.41 lakh crore in November 2020. Discoms owed a total of Rs 1.04 lakh crore to power generation firms in November 2019, according to portal PRAAPTI (Payment Ratification And Analysis in Power procurement for bringing Transparency in Invoicing of generators).
Power producers give 45 days to discoms to pay bills for the electricity supply. After that, outstanding dues become overdue and generators charge penal interest on that in most cases.
However, the Centre had given some breathers to discoms for paying dues to power generating companies (Gencos) during COVID-19-induced lockdown. The government had also waived penal charges for late payment of dues in the directive.
Additionally, in May 2020, the government announced Rs 90,000 crore liquidity infusion for discoms under which these utilities would get loans at economical rates from Power Finance Corporation (PFC) and REC Ltd. This was a government initiative to help gencos to remain afloat. Later, the liquidity infusion package was increased to Rs 1.2 lakh crore.
Discoms in Rajasthan, Maharashtra, Uttar Pradesh, Jammu & Kashmir, Telangana, Andhra Pradesh, Karnataka, Jharkhand, Haryana and Tamil Nadu account for the major portion of dues to power gencos, according to PRAAPTI data.
Overdue of independent power producers amount to 34.01 per cent of the total overdue of Rs 1,29,868 crore of discoms in November. The proportion of central PSU gencos in the overdue was 34.27 per cent.
Among the central public sector power generators, NTPC alone has an overdue amount of Rs 19,215.97 crore on discoms, followed by NLC India at Rs 6,932.06 crore, Damodar Valley Corporation at Rs 6,238.03 crore, NHPC at Rs 3,223.88 crore and THDC India at Rs 2,085.06 crore.
Among private generators, discoms owe the highest overdue of Rs 20,242.74 crore to Adani Power followed by Bajaj Group-owned Lalitpur Power Generation Company Ltd at Rs 4,373.23 crore, GMR at Rs 2,195.12 crore and SEMB (Sembcorp) at Rs 2,168.45 crore.