AP owes second-highest dues to RE companies, agri power scheme may be hit

By Newsmeter Network  Published on  19 Oct 2020 4:30 AM GMT
AP owes second-highest dues to RE companies, agri power scheme may be hit

Vijayawada: Andhra Pradesh owes the second-highest dues to the renewable energy (RE) generation companies in the country after Tamil Nadu.

Andhra Pradesh government, which aims at increasing the renewable energy capacity to 10,000 MW in a bid to make its free power to farmers sustainable, is likely to face challenges if the dues are not cleared.

Of Rs 10,300 crores dues that the states owe to RE generation companies in the country, Andhra’s contribution is 25%. Tamil Nadu owes 34% of total dues.

According to portal PRAAPTI (Payment Ratification And Analysis in Power procurement for bringing Transparency in Invoicing of generators), the discoms owe Rs 1.22 lakh crores to power generation companies.

The portal was launched in May 2018 to bring in transparency in power purchases. In August 2020, the total overdue amount, which was not cleared even after 45 days of a grace period offered by generators, stood at Rs 1,20,439 crore as against Rs 78,646 crore last year.

Andhra Pradesh discoms owe Rs 4580 crores. Of which the state government needs to pay Rs 1900 crores to RE generators.

In 2015, Ujwal DISCOM Assurance Yojana (UDAY) was launched by the government wherein financial and technical targets were given to the states. The states took over 75 percent of the debt and issued bonds that were subscribed by banks and financial institutions. Five years on, the discoms remain under debt.

The outstanding amount to the renewable generators can shake their confidence in discoms’ and as a result they may look to sell their power in the open market.

Piling dues and payment delays can render the renewable projects unviable, which are already facing other risks such as tariff renegotiation. It may deter lenders from committing funds to such projects, potentially driving up the finance cost. This vicious cycle can seriously hurt the renewable sector.

Meanwhile, the Union government has announced Rs 3,300-crore loan to Andhra Pradesh as part of the Atma Nirbhar Bharat Abhiyaan for the implementation of various schemes pertaining to the power sector. The Power & New and Renewable Energy Ministry has assured a 30% subsidy on the 10,000 MW solar power project being undertaken by the AP government.

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