Equipped with stronger cash flows after restructuring of their short-term debt by lenders, discoms, especially those from states like Uttar Pradesh and Tamil Nadu, have managed to pay R3,500 crore of their outstanding dues to power traders like PTC India, Lanco Infratech and NTPC Vidyut Vyapar Nigam. Payments have resumed in the second quarter of this fiscal and more dues are to be cleared in the current quarter, sources said.
However, the discoms are yet to step up electricity purchases from the open market to meet their power shortfalls.
Four statesRajasthan, Haryana, UP and Tamil Nadu, which accounted for more than 60% of R1.9 lakh crore debt of the state power sector estimated as at the end of March last year have completed restructuring their discom loans, inspiring confidence in banks and financial institutions to resume lending to them.
Besides, these states have also hiked electricity tariffs by 20-37% since 2012 to access the benefit of financial restructuring plan (FRP) offered by the Centre, which has led to a sizeable increase in their discoms revenues. Significantly, the FRP stipulates timely revision of tariff by discoms to meet their expenditure-revenue gap in a time-bound manner.
Kameswara Rao, leader, energy utilities and mining, PWC said: Judging from discoms' payment pattern, it appears that their cash flow position has materially improved.
Salil Garg, an analyst with India Ratings, a credit rating agency, concurred. Implementation of FRP by some states has not only improved their discoms' cash flows but has also proved positive for utilities' operations as they are required to revise tariffs on a regular basis, Garg told FE.
Sources said after restructuring its debt, UP Power Corporation Ltd (UPPCL) has cleared entire R750 crore of power purchase dues to PTC India. The payment was due for more than a year. UPPCL has also started clearing its dues to NTPC Vidyut Vyapar Nigam (NVVN) and Lanco Infratech. NVVN sources told FE that the UP discom has cleared entire dues to the company. Lanco Infratech's total receivables on account of power supply to discoms have come down to R2,939 crore in the second quarter from R3,285 crore in the first quarter. Of this, R250 crore came from UPPCL alone, company sources said.
Industry sources said after recast of their debts, Tamil Nadu and Rajasthan discoms have also become more regular in making payments for power purchased from traders. Tamil Nadu Generation and Distribution Corporation (Tangedco) has