Listed power cos have ₹11,252 cr of bills pending for over 2 years

As the State power distribution companies’ overdue payments to power generators continue to stay above ₹1,00,000 crore, investors need to pay attention to the overdue bills of listed power generators. A BusinessLine analysis of invoice-level data from Centre’s Praapti.in portal shows that over ₹11,252 crore of power dues to listed power companies is pending for more than 2 years.

Rajasthan and Maharashtra have the highest overdues that are pending for more than two years at ₹4,578 crore and ₹3,362 crore, respectively. These two States are followed by Tamil Nadu that has overdue power bills of ₹1,384 crore, pending for more than two years.

Worst affected

Among the listed power generators, Adani Power is the worst affected in term of overdues with nearly ₹8,600 crore worth of overdue power bills pending for over two years.

Majority of these overdues are pending from Maharashtra and Rajasthan’s discoms. The company also has nearly ₹2,000 crore worth of overdue power bills pending for 1-2 years.

The second worst affected company is NLC India that has nearly ₹859 crore worth of overdues pending for more than two years. Nearly 86 per cent of this amount is owed by Tamil Nadu’s discoms.

In terms of unpaid overdue power bills pending for 1-2 years, NTPC is the worst affected with nearly ₹4,500 crore worth of bills overdue. Tamil Nadu makes up for nearly ₹2,000 crore of total overdue bills in this period, followed by the erstwhile state of Jammu and Kashmir at ₹1,631 crore.

The second worst affected company in the 1-2 years period is NLC India, which has ₹3,558 crore worth of overdue bills worth nearly ₹3,000 crore, payable by Tamil Nadu.

What happened?

There are existential issues in the power sector with weak financial position of State discoms due to high aggregate technical and commercial losses, cross subsidy, delay in subsidy payment by States, no change in power tariffs, etc.

“In response to the move last August to introduce letter of credit, many States cleared a lot of their dues after August 2019,” says Sabyasachi Majumdar, Group Head & Senior Vice-President – Corporate Ratings at ICRA. “As a result, they did not have financial wherewithal to pay the older dues.”

States were essentially paying off power producers for the latest invoices raised against power purchased after August 2019, rather than pay the older ones. This has led to piling up of older overdue payments.

Another reason overdues more than a year (and up to three years) are piling up could be the delay in implementation of tariff change orders. Power generators continue to raise invoices based on the new tariffs, but the States continue to pay the old tariff. This leads to under-recovery of tariffs, even though power generators recognise the whole invoice amount in their books as revenue.

In some cases, there are also invoices raised for clean energy cess, which have remained unpaid for nearly three years.

“What happens sometimes is that there are some tariff orders that are passed,” says Majumdar. “The States may not be in a position to service the incremental tariff in many cases. There may be a mutual agreement between State discoms and power generators.”

Experts say that the Centre must ensure that all old dues are paid in full by discoms before undertaking any new bailout package for the nearly bankrupt State discoms.