The Ministry of Power (MoP) has constituted a new committee to study and submit its recommendations into the issue of delayed payments by distribution companies (DISCOMS) to power generating companies (GENCOs) and Independent Power Producers (lPPs).

The terms of reference for the committee to deliberate has been set by the government as follows-

• Study the working capital cycles of DISCOMs and GENCOs with respect to power procurement for all competitively bid and regulated PPAs, and identify gaps that may be contributing to the GENCOs’ stress
• Study the frameworks of the rules and regulations in regard to payment mechanisms and transaction structures across the power sector value chain currently
• To explore possibilities and suggest a mechanism for prepaid system of transactions from DISCOMs to generators for power purchase

According to the memorandum issued by the MoP, the ministry has already sent an advisory to all states for moving towards prepaid smart metering solutions for all consumers in the next three years.

It says- “ln this regard, a view has emerged that the payments from DISCOMs to the GENCOs may also be moved towards a prepaid system.”

The committee has one month to submit its recommendations.

In November 2018, the government of India constituted a high-level empowered committee on July 29, 2018 chaired by the Cabinet Secretary to address the issues of stressed thermal power projects.

In May 2018, MoP launched a web portal and an app called PRAAPTI (Payment Ratification and Analysis in Power procurement for bringing Transparency in Invoicing of generators) to bring in greater transparency in power purchase transactions between generators and distribution companies.

Earlier, Mercom reported how payment delays by DISCOMs is posing a challenge for the growing renewable energy sector in India.