Maharashtra, Rajasthan, M.P. owe ₹2,592 cr to wind energy companies

M Ramesh Chennai | Updated on January 16, 2018

High cost of power the cause for overdues

Wind power producers that have plants in Maharashtra, Rajasthan and Madhya Pradesh are struggling to get their payments for over a year now.

The problem is particularly acute in Maharashtra, where, in addition to the companies not getting their payments, many wind machines are standing ready to be commissioned, but the state-government-owned electricity distribution company (discom) has not signed the power purchase agreement.

According to data made available by the Wind Independent Power Producers’ Association (WIPPA), Maharashtra, Rajasthan and Madhya Pradesh respectively owe wind IPPs ₹1,211 crore, ₹897 crore and ₹483 crore, respectively. The three BJP-ruled States together owe ₹2,592 crore to wind energy companies.

In many cases, no payment has been received from discoms since July 2015. One of the worst hit is ReNew Power, to which ₹574.8 crore is outstanding, of which ₹350 crore is from Maharashtra alone, against 370 MW of its assets in the State —the last payment the company received was in July 2015. CLP India (₹385 crore), Mytrah (₹217 crore), Green Infra (₹229.34 crore), Greenko (₹163 crore), Hero Future Energies (₹123 crore) and Orange Renewable (₹83 crore) are other leading IPPs to whom payments are due. The delayed payments have not only caused IRR calculations of the companies go awry, but the issue has become a ‘risk factor’ in negotiations with financiers, raising the cost of finance for all IPPs.

P Vinay Kumar, CEO of Greenko, observed that at least Maharashtra could well afford to pay and it “doesn’t have any excuse not to pay.” He said that Rajasthan would at least respond to communications but “Maharashtra is a black box.”

The other problem in Maharashtra is that wind turbines of a total capacity of 560 MW have been commissioned but electricity could not be sold because the State has not signed the power purchase agreements. In addition, another 120 MW of machines are ‘erected, but certificate of commissioning not received’.

High cost of power

The reason behind the long overdues is believed to be the high cost of wind power, fixed by the respective state electricity regulatory commissions. Rajasthan has the highest feed-in tariff — ₹5.76 per kWhr in some windy districts, and ₹6.04 elsewhere (for those who do not avail themselves of the ‘accelerated depreciation benefits; it is slightly less for those who do.) Maharashtra has divided the State into four zones, and the tariffs range from ₹3.82 to ₹5.56. Madhya Pradesh recently revised the tariff downwards to ₹4.87, from ₹5.92 earlier.

Meanwhile, the PMO has asked the matter to be looked into, said a senior official of IREDA, the government-owned renewable energy NBFC, at the Renewable Energy India 2016 fair in Delhi last week.

In a letter to the Ministry of New and Renewable Energy, WIPPA has warned that if such huge payment delays continue to occur it would be difficult to meet the targets committed by the industry at the government-sponsored REINVEST meet last year.

Published on September 12, 2016

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