NEW DELHI: Don’t blame hapless consumers for discoms’ inability to pay power producers on time. If state government departments and urban local bodies (ULBs) alone pay their electricity arrears, distribution utilities will be able to clear their entire outstanding to generation companies and still be left with some money.

A review document of UDAY (Ujjwal Discom Assurance Yojana), the Centre’s ambitious plan for resuscitating distribution utilities, by government think-tank Niti Aayog last month shows government departments and local bodies running up power dues of Rs 41,386 crore in the first nine months of 2018-19.

In contrast, discoms’ overdue payment to power stations during the same period stood at Rs 22,061 crore, or nearly half the unpaid amount from government departments and ULBs — government offices, police, fire, water and sewage departments as well as other civic bodies.

“This indicates a problem at the state government end and not with UDAY per se. Performance of discoms is as much about their own performance as of other entities in the power sector value chain. States have to realise in any case, they have to bear the cross of discom losses. We are impressing upon states to look at a system wherein governments directly pay discoms for power consumed by departments and ULBs,” a power ministry official said.

Such large unpaid bills adversely impact cash flow and operational capability of discoms. The impact gets magnified by other issues such as inadequate tariff revision and delayed subsidy. Ultimately, independent power plants find it difficult to service loans on time and face increased threat of becoming stressed assets due to delayed payments from discoms.

According to the Niti Aayog review, government departments and ULBs of UP, Telangana, Andhra Pradesh, Maharashtra and Chhattisgarh account for Rs 30,354 crore, or over 73%, of the discoms’ arrears. UP, Telangana, Andhra Pradesh and Maharashtra are also with the bulk of overdue payments to generation companies

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