The outstanding dues of power generation companies have risen to ₹84,000 crore and the overdues (amount due beyond the 60-day grace period) have gone up to nearly ₹65,000 crore, according to Minister of State (Independent Charge) for Power and Renewable Energy RK Singh.

Speaking in the Lok Sabha, Singh responded to queries on the pre-payment for power purchases being enforced under existing power purchase agreements (PPAs).

He said, “As of today, the outstanding of generation companies has gone up to ₹84,000 crore... This is not the sustainable situation though, but we are fully committed that we will correct this and move forward in the right direction.”

Defending the move to enforce pre-payments, Singh said, “We have not changed the postpaid system to prepaid system. The electricity bills of generators are still paid 45 to 60 days after the supply. We have only made it compulsory to comply with the conditions of the contract under which the power is supplied.”

In a written reply on the same subject, the Minister said, “As on September 30, 2019, the overdues outstanding amount of generating companies payable by Distribution Licensee has increased to around ₹65,000 crore. To make the power sector sustainable, it is essential that the distribution licensees pay for the power they buy. If they don’t pay in time, the generating company will not be able to buy coal as coal is supplied only on advance payment under cash and carry policy of Coal India Limited.”

“In order to correct the situation, the government has directed that the provisions of the PPA signed between the distribution licensees and the generating company for making payments for the power purchase and opening of the Letter of credit (LC) be adhered to. The government cannot remove any condition in the PPA as the PPA is sacrosanct and is signed by distribution company and the generating company,” Singh added.