No. 17 - 2020 / LC                                30-03-2020

All Office Bearers - AIPEF

Chairman / Secretary General - SIPEF/WIPEF/EIPEF/NIPEF

President / General Secretary - All AIPEF Constituents

Sub: Relaxation in DISCOMS payment security mechanism

After AIPEF wrote letter to PM Sri Narendra Modi,  Ministry of Power has relaxed the payment security mechanism to be ensured by power distribution companies (Discoms). This has been done to give support to Discoms that are finding it difficult to collect payments for bills raised on consumers in light of the coronavirus lockdown.

2. MoP order says many consumers of the Discoms are unable to pay their dues. This has critically affected the liquidity position of the Discoms thereby impairing their ability to make timely payments to generating and transmission companies and maintaining letter of credit.

3. Order further says considering the unprecedented and force majeure situation, it has been decided that power may be scheduled even if payment security mechanism is established for 50 per cent of the amount for which payment security mechanism is to be otherwise established contractually. This order shall be in effect till June 30, 2020. MoP has assured to  also request States not to charge a late payment surcharge on end consumers who are not able to pay bills timely because of the Cocid-19 lockdowns.

4. Normally, Discoms maintain a payment assurance for all the power that they intend to procure from a power generator (Genco). The prepayment for power procurement mechanism was in place since June 28 last year.

5. AIPEF wrote letter to Prime Minister stating that trouble for power sector multiplied manifold when Prime Minister announced a 21-day lockdown to prevent the spread of COVID-19 pandemic. With lock out power demand in the states across the country has come down by 20-30 per cent and their major source of income from high end earning sources like the Railways, industrial and commercial consumers have been blocked due to complete shutdown.

The containment measures have resulted in a sudden fall in electricity bill collections of the Discoms by 80 per cent over the last few days. The sudden fall in collections has resulted in the inability of Discoms to make daily payments not only to generators which in turn is affecting the coal payments and coal transport by railways, but also debt servicing to banks and financial institutions.

Shailendra Dubey

Chairman