The Maharashtra Electricity Regulatory Commission (MERC) has directed the Maharashtra State Electricity Distribution Company Limited (MSEDCL) to reconcile differences in its outstanding dues with wind generators in the state and to pay them the total amount due along with late payment charges (DPC).
Winro Commercial (India), MSPL Limited, and Riddhi Siddhi Gluco Biols Limited had filed petitions with the MERC asking it to direct the MSEDCL to pay its outstanding dues for wind power supplied along with delayed payment charges as per their agreements. MSPL and Riddhi Siddhi also raised the issue of the MSEDCL’s non-compliance to its energy purchase agreements.
Overall, the generators claimed outstanding dues amounting to ₹63.9 million (~$853,657) as per their energy purchase agreements. This included delayed payment charges of ₹40.4 million (~$542,260), including interest.
The MSEDCL, in its response, claimed that it owed only ₹53.6 million (~$719,434) to these developers. The details are provided here:
Separately, in its petition, MSPL Limited also initially claimed that MSEDCL owed it ₹46.7 million (~$626,821) in outstanding dues under its short-term power purchase agreement. In a subsequent rejoinder, however, it stated that it received a significant chunk of these dues and that only about ₹8.2 million (~$110,063) was left unpaid.
The MSEDCL explained that the payment delays were a result of the record low recoveries from agricultural consumers, arrears of government departments for the supply of power to public waterworks, and streetlight consumers, among others. It said that if there were no funds, it might not always be possible to make timely payments to wind generators.
The state distribution company (DISCOM) also said that it had sought financial support from institutions due to the cash crunch it was experiencing due to the COVID-19 crisis. It explained that once sanctioned, the outstanding dues of the wind power generators would be paid to them directly by these financial institutions.
In its analysis, the Commission said that it had taken note of the MSEDCL’s worsening financial condition on account of the COVID-19 outbreak and the fact that it has approached financial institutions to help pay its outstanding dues.
It noted that the delays in the payment of dues by the MSEDCL were neither willful nor deliberate, adding that it saw it fit to allow the MSEDCL to pay its dues to the generators with the help of financial institutions.
In its final order, the MERC directed the parties to reconcile the differences in the claimed delayed payment amount among themselves within two weeks from the date of issue of the order. It also ordered the MSEDCL to set a date within two weeks to pay its full and final outstanding delayed payment amount to the generators.
The Commission further directed that if the MSEDCL deviates from its commitments, penal interest will accrue at 1.25% per month on any delayed payment charges that are left unpaid.
About MSPL Limited’s claim for dues, the Commission ruled that late payment charges will be applicable as per the renewable energy tariff regulations. It noted that a substantial amount of these dues has been paid and directed the DISCOM to pay the remainder once financial support is made available. MERC also directed the MSEDCL to take the necessary steps to issue credit notes on time.
Previously, Mercom had reported that the Ministry of Power had issued a clarification regarding letters of credit (LoC) to be given by distribution companies. It stated that DISCOMs are expected to deposit letters of credit for 50% of the cost of power they want to be scheduled. Then, the remaining 50% will have to be paid within 45 days of the presentation of the bill or as specified in the power purchase agreement. If the payment is not made as specified, the late payment surcharge will apply.
The distribution companies owed renewable generators ₹101.11 billion (~$1.3 billion) in overdue payments (excluding dues under dispute) spread across 544 invoices at the end of June 2020, according to data from the Ministry of Power’s payment ratification and analysis portal (PRAAPTI).
As per the data released by PRAAPTI, the outstanding dues to the renewable generators stood at ₹8.4 billion ($111.9 million). The portal also showed that ₹123.3 million (~$1.6 million) was under dispute.
The states of Assam, Manipur, Nagaland, Rajasthan, Madhya Pradesh, Maharashtra, Telangana, Karnataka, Odisha, Kerala, West Bengal, Jharkhand, Goa, Delhi, Himachal Pradesh, Uttarakhand, and Jammu and Kashmir, were rated as the ‘worst’ states for ease of payments by the DISCOMs.
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Nithin Thomas is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai. More articles from Nithin.