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COVID 19 lockdown: Govt allows discoms 3 months for payment to gencos

To ensure 24x7 supply to all consumers during the COVID 19, the govt has allowed stressed discoms three months to make payments to gencos
New Delhi: To ensure 24x7 supply to all consumers during the lockdown imposed in the wake of the COVID 19 pandemic, the Ministry of Power has allowed stressed discoms (distribution companies) a window of three months to make payments to generating companies and transmission licensees and no penalty on late payment. The announcement is significant because the government had made it mandatory in August 2019 for discoms to issue a letter of credit to get power supply from gencos (generation companies). “Directions have been issued to the Central Electricity Regulatory Commission to provide a moratorium of three months to Discoms to make payments to generating companies and transmission licensees and not to levy penal rates of late payment surcharge. State Governments are being requested to issue similar directions to State Electricity Regulatory Commissions,” an official statement from the Ministry of Power said on Saturday.

‘No curtailment of supply to any DISCOM during COVID 19 lockdown’

“Till 30th June, 2020, the payment security mechanism to be maintained by the Distribution Companies with the Generating Companies for dispatch of power shall be reduced by fifty percent,” the statement said. It added, “CPSU Generation / Transmission Companies will continue supply/ transmission of electricity even to Discoms which have large outstanding dues to the Generation / Transmission companies. During the present emergency, there will be no curtailment of supply to any DISCOM,” Due to the lockdown, consumers are unable to pay their dues to the discoms. This has affected the liquidity position of the discoms, thereby impairing their ability to pay to the generating and transmission companies. Distribution companies have already been struggling to clear the mounting debt to generation companies.

The backdrop

Around 70 percent of power generation is from coal-based power plants. In order to maintain the continuity of supply of coal by domestic coal companies and transportation by railways, the ministry is in touch with the Ministries of Railways and Coal. Union Minister RK Singh has said that the Ministry of Power is committed to providing 24x7 supply of electricity to all consumers during the lockdown.