Central help sought to bail out Discoms

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The COVID-19 containment measures have dealt such a severe blow to the Andhra Pradesh power distribution companies (Discoms) that Energy Department Secretary N. Srikant has written a letter to the Union Ministry of Power (MoP) requesting its supply chain support and help in mitigating liquidity crunch. This is intended to keep the ailing Discoms afloat as their losses have been piling up for many years due to multiple factors, including some extraneous ones.

Mr. Srikant has informed the Secretary of the MoP that there has been a drastic fall in electricity bill collections by up to 80% in the last few days though e-billing and online payments are available as people could not move out due to the lockdown. As a consequence, the Discoms’ revenue dipped suddenly.

Debt servicing

The Discoms use their daily collections for debt servicing and to pay to the power generators, who in turn make daily payments for coal suppliers, the Railways and lenders.

The inability of the Discoms to make prompt payments because of the steep fall in bill collections is affecting the coal payments and coal transport by the Railways, and also debt servicing to the banks and financial institutions, the Energy Secretary has stated.

Mr. Srikant has also said that the daily demand for electricity fell by 20% due to the shutdown of various commercial, business and industrial establishments, and that unless the Discoms meet their scheduled payment obligations, they will not only be unable to make coal procurement but also find it extremely difficult to maintain buffer stocks.

‘Make it essential service’

To help the Discoms in tiding over the crisis, Mr. Srikant has requested the MoP to declare coal mining activity, along with connected forward/ backward linkages such as coal transport, as essential service and ensure regular availability of coal, direct all suppliers and miners to deliver coal as per the existing fuel supply agreements without insisting on daily payments till the crisis ends, and to get the Railways to transport coal without asking for immediate payments.

Besides, Mr. Srikant has requested the Singareni Collieries Company Limited to supply coal to AP-Genco and A.P. Power Development Company Limited, irrespective of their outstanding payments.

Mr. Srikant has further suggested that the RBI be requested to instruct the banks to extend time to power generators and Discoms for repaying debts and interests due till March 31 without classifying their accounts as sub-standard /NPA, to direct banks, PFC, REC etc. to give short and medium term loans to the Discoms and power producers to enable them to raise working capital and to relax FRBM limits to facilitate government guarantees.

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