Economy

CII tells Centre to put on hold liquidity infusion to AP discoms

Venkatesh Ganesh Mumbai August 27 | Updated on August 27, 2020 Published on August 27, 2020

The Confederation of Indian Industry (CII) has written to Power Minister RK Singh, asking the Centre to put on hold any further disbursement to Andhra Pradesh discoms under the recently announced discom liquidity scheme.

In a letter sent to Singh, CII said: “Many of our industry members have still not received a substantial portion of the payments pending to them by the Andhra Pradesh discoms from the first tranche. In addition to this, many of our industry members are facing revenue losses due to certain arbitrary decisions being taken by the AP discoms.”

Liquidity infusion

The first tranche refers to the ₹45,000-crore liquidity infusion, which the Indian government announced in May, to help discoms pay off their dues.

While the dues have piled over the last few years, it got accentuated due to the Covid-19 pandemic, as industries and factories, who contribute bulk of the income, had shut their operations.

“We would like to draw your attention that despite paying the partial tariff, Andhra Pradesh discoms have made unexplained deductions in the payment even from the interim reduced tariff,” noted CII. Also, arbitrary deductions have been made by AP discoms over the last 3 years, assuming certain maximum Capacity Utilisation Factor (CUF) for wind projects, disallowing generation from DC overloaded capacity for solar projects and deduction of an amount equivalent to Generation Based Incentives till August 2018. All of which are not legitimate and have no legal grounds.

These deductions are estimated at around ₹1,000 crore. “While the overall deductions vary from one IPP to another, our preliminary estimates indicate such deductions amount to more than ₹1,000 croreand are immediately payable,” noted CII.

Also, the Andhra Pradesh State Load Despatch Centre (APSLDC) and Transmission Corporation of Andhra Pradesh (APTRANSCO), have resorted to excessive illegal curtailment of electricity, resulting in huge generation and revenue losses for the renewable companies in the State. The YS Jagan Mohan Reddy government, after coming to power, terminated solar and wind power PPAs entered into by N Chandrababu Naidu government. As a result of the AP government’s decision to revoke PPAs, the matter got dragged into the AP High Court.

Such an action by the Centre would ensure financial sustainability of the RE generators in Andhra Pradesh and would also provide a strong signal in support of sanctity of contract.

Last week, the National Solar Energy Federation of India (NSEFI) wrote to Singh, seeking the Centre’s intervention, in an effort to seek early decision on the Power Purchase Agreement (PPA) dispute with Andhra Pradesh. While the Reddy government’s intent was to reduce the high PPA tariffs, the move has put 5.2GW of installed wind and solar power capacity, with combined debt of ₹21,000 crore, at the risk of a default.

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Published on August 27, 2020
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