Power distribution companies (DISCOMs) in Andhra Pradesh, Telangana, and Karnataka are staring at acute power shortages as the National Thermal Power Corporation (NTPC) has warned that it will stop supply due to non-payment of dues.

The three states together owe NTPC ₹58.38 billion (~$814.99 million) in outstanding power bills (both conventional and solar). A total amount of ₹18.84 billion (~$262.6 million) is due to be paid by these DISCOMs to NTPC for solar power supplied under the National Solar Mission (NSM).

Dues amounting to ₹15.9 billion (~$221.8 million) have been outstanding for more than two months.

When contacted, an NTPC official said, “We have approached these DISCOMs to pay the pending dues but to no avail. Now, according to new regulations, the NTPC will cease supplying power to these DISCOMs from February 6, 2019.” These are NTPC’s self-owned projects.

Elaborating further, the NTPC official sad, “We won’t completely stop the supply as that would create a problem for citizens of the country. Instead, the NTPC will reduce the quantum being supplied to these DISCOMs until clearance of all dues by them.”

This also brings to fore the suffering of renewable energy generators because of non-clearance of dues by DISCOMs. Financing renewable energy projects is not an easy task in India as banks and financial institutions are wary of lending to projects focused on intermittent sources of energy when projects based on coal are turning into non-performing assets (NPAs).

In case of NTPC, it can make the defaulters pay by virtue of its massive generation capacity, but for smaller players in the renewable energy sector it becomes a matter of survival as they are completely dependent on the whims of DISCOMs.

The Ujwal DISCOM Assurance Yojana (UDAY) program was supposed to be helping some DISCOMs stuck in a debt-rut. Based on the non-payment of dues, it does not look like UDAY has helped the financial situation of DISCOMs.

Recently  Ministry of Power constituted a new committee to study and submit recommendations into the issue of delayed payments by DISCOMs to power generating companies and independent power producers. The sooner the final results are published, the better it will be for renewable energy sector.

Image credit: RESOL