Discoms' Outstanding Dues To Generators Rise Again On Higher Tariffs

State power distribution companies' total outstanding dues to generation companies have risen once again, though marginally, after dropping from their peak last year.

The total outstanding dues as of Jan. 3 rose by around Rs 3,000 crore to Rs 64,867.28 crore—overdues of Rs 32,733 crore and current dues of Rs 32,134 crore—from a year ago level, when the dues fell by half to Rs 61,500 crore, according to Ministry of Power's PRAAPTI portal.

The increase is largely on account of higher revenue accrual to generation companies due to higher tariffs in FY24. Power tariffs, on average, rose by 7-8% in India in the current fiscal, leading to better revenues for generation companies from discoms.

The annual revenue of Indian discoms is around Rs 6-7 lakh crore, which comes to an average of Rs 58,000-59,000 crore monthly, according to analysts. discoms' total outstanding in the range of Rs 60,000-Rs 70,000 crore is normal and within the payable range, they said.

"The late payment surcharge mechanism has brought discipline in discoms' payment pattern. The payment is happening on time for outstanding as well as current dues, where due date has not exceeded," said Rupesh Sankhe, vice president and power analyst with Elara Securities India Pvt.

Under LPS, if discoms fail to pay within 45 days of the due date, penalty is imposed and power supply is cut from generation companies.

Parameters under revamped distribution sector scheme have contributed majorly towards discoms' improved financials, according to Anujesh Dwivedi, partner, Deloitte India.

"To secure funding under the Rs 3+ lakh crore RDSS, the discoms are required to show on-ground changes in reduction in aggregate technical and commercial losses, and reduction in the gap between average cost of power supply and average revenue realised per unit, in addition to various other parameters," he said.

Going ahead, the drop in power purchase cost on account of higher renewable contributions, increase in power tariffs, smart metering and upgradation of infrastructure to reduce transmission and distribution losses, will help discoms improve their financial conditions, which will help them pay their dues on time as well, the analysts said.