Power Producers Body of Construction Industry Urged FM Sitharaman for Payment Protection Measures

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Representatives of the power sector have urged the government to bring a new policy framework for the industry in lines of MSME Act and Consumer Dispute Resolution Act, wherein at least 75 per cent of the claim amount has to be paid by any party in order to file an appeal challenging the orders of regulatory commissions.

In a letter to Finance Minister Nirmala Sitharaman, the Association of Power Producers (APP) said such a measure was required as one of the biggest challenges afflicting power companies is the large overdue of receivables pending over long time, including regulatory dues.

Recovery of such dues, the letter said, is inordinately delayed due to multiple litigations by the DISCOMs as a strategy to delay their payment obligation. Besides, orders issued by regulatory forums are challenged as a matter of routine and honouring directions for interim payment issued by regulatory commissions are rare; even such orders from appellate tribunals are not adhered to in many cases and mostly end only at Supreme Court.

In such a scenario, the power industry feels that legislation line the one available to the MSMEs would prevent payment delays and ensure that cycle of power generation and distribution is not disturbed. Depending on the outcome of a judgment, such money can be re-distributed honouring the award later.

“This becomes essential to stop frivolous appeals, provide some sanctity to the Orders of the tribunal/Commissions, eliminate the inordinate delay in realising the money and huge relief to the cash strapped infrastructure sector,” APP director general Ashok Khurana said in the letter to FM.

As part of Atmanirbhar Bharat Abhiyan, the government has already introduced a Rs 90,000 crore liquidity window for state discoms to clear their dues to power generators. This was enhanced later to Rs 1.20 lakh crore. However, only around Rs 31,000 cr has been disbursed to the States till date whereas on the other hand, the current overdue amount to generators has increased to approximately Rs 1.25 Lakh crores as on September 2020.

Power generators feel that despite liquidity infusion scheme of the government, actual release of money could be delayed due to litigation and a law guaranteeing some payment would work.

With regard to the liquidity, APP has also urged government/RBI to undertake a specific (targeted long term repo operation) TLTRO tranche of Rs 1,00,000 crore focused on Infrastructure companies with minimum investment grade rating. This, the association said, will help power sector companies to meet their capex requirement for setting up new projects in the renewable sector, for the environmental emission control equipment and for their working capital needs.

APP has also urged the finance ministry to look into the issue of risk weights that banks attach to loans to infrastructure sector and consider reducing it to 50 per cent so that more funds are available with banks to lend to the sector.

Further, in order to incentivize local manufacturers like BHEL, L&T and also to implement ‘Atmanirbhar Bharat’ in power sector, GoI may provide Interest subvention scheme for local manufacturers as this will help the banks to lend to such companies to revive local manufacturing which has been subdued over the last few years due to low demand from the power sector, APP has said in its letter to FM.

SMEStreet Edit Desk

SMEStreet Edit Desk is a small group of excited and motivated journalists and editors who are committed to building MSME ecosystem through valuable information and knowledge spread.

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