Power distribution utilities or discoms' total outstanding dues were reduced by Rs 29,857 crore to Rs 1,08,092 crore, which were Rs 1,37,949 crore on June 3, 2022, Parliament was informed on Tuesday.
One of the key indicators of financial distress of discoms is mounting power purchase dues towards the generation companies (gencos).
With the implementation of Electricity (LPS and Related Matters) Rules, 2022, a remarkable improvement has been seen in the recovery of outstanding dues, power minister R K Singh said in a written reply to Rajya Sabha on Tuesday.
The minister informed the House that the total outstanding dues of the states, which were at Rs 1,37,949 crore as on June 3, 2022, have been reduced by Rs 29,857 crore to Rs 1,08,092 crore, with the timely payment of just five monthly instalments.
Distribution companies are also paying their current dues in time to avoid regulations under the rule and have paid almost Rs 1,68,000 crore of current dues in last five months, he stated.
Based on the results achieved so far, it is expected that strict implementation of the LPS (late payment surcharge) Rules will bring back financial viability of the power sector in the country and would attract investment to ensure reliable 24x7 electricity to the consumers.
This rule has not only ensured that the outstanding dues are liquidated but also ensured that the current dues are paid on time. It may be seen that the rule has played a vital role towards ensuring financial discipline in discoms, the minister added.
In another written reply to the House, Singh stated that there is no proposal for privatisation of any existing state-owned distribution licensee and they shall continue to function as earlier.
About fears of the impact of the Electricity Amendment Bill 2022 on the poor, he explained that the provision of multiple licensees already exists in the present Electricity Act 2003 and no new concept has been introduced.
The amendments propose the removal of some bottlenecks so that the existing provisions can be implemented, he further explained.
There is no proposal to change ownership of any asset or network (of power distribution), he stated.
The licensee owning the network will get revenue in the form of wheeling charges, as determined by the state commission, for its investment in network. Accordingly, the distribution licensee which uses the network shall pay the charges as determined by the state commission, he said.
The minister said that there is no possibility of cherry-picking, as the law provides for universal service obligation and minimum area of supply, as well as minimum tariff to be decided by the state commission, and a cross-subsidy balancing fund and sharing of the cost of existing PPAs (power purchased agreement).
Thus the distribution licensee, who has industrial and commercial consumers, will have to deposit the cross-subsidy in the cross-subsidy balancing fund which shall be used by other licensees who have a deficit of cross-subsidy, he told the House.
The provision for multiple licensees in the same area of supply already exists in the Electricity Act, 2003.
The proposed amendment will ensure better services to thnsumers and electricity at competitive rates. State Regulatory Commission will also lay down a ceiling tariff and state governments will continue to have the right to give susubsidies per their discretion, Singh said.