In a move that could push the already beleaguered power distribution companies into more trouble, the Centre has brought changes to the Electricity Act to suspend discoms from buying power if they fail to clear dues to generation companies beyond six months.

The Centre has also brought in a clause in the Act to impose penalties on the discoms for late payment of dues. The Centre on Monday issued a notification by amending the Electricity Act, 2003, to make discoms clear the dues on time. As per the new guidelines stipulated by the Centre, discoms cannot escape from paying dues to the Gencos (PPAs) and Transcos (TSA) beyond one month.

“Discoms will be penalised with a 0.5% penalty on the total due to the firm from which it procured power, either Genco or private power developer, in case it fails to pay the dues after 30 days. This is aimed at making the discoms cough up at any cost and push them into more debts and losses,” said AP Assistant Executive Engineers (AEEs) Association president Vamsi Srinivas. Similarly, the penalties would keep growing for six months as the Centre has capped the maximum penalty at 3%.

Surprisingly, the Centre has given liberty to the transmission company or the power supplier (private developer) to stop the supplies to the particular discoms and force the company to pay the dues.

The Centre will debar the distribution companies from purchase of power even from online exchanges or other sources through open access. This would effectively end the discoms’ options on short term purchases through the exchange. “Although it looks like that the measures are aimed at making the discoms more disciplined and accountable, it is actually aimed at stifling their finances to privatise the power distribution sector,” said a senior official of Central Power Distribution Company Limited (CPDCL) who did not wish to be quoted.