The Solar Power Developers Association (SPDA) has written to the Ministry of New and Renewable Energy (MNRE) regarding the overdue payments from state distribution companies to solar power developers.

The SPDA in its letter has highlighted the issue of non-payment being suffered by developers in the state of Telangana.

The letter sent by Praveen Golash, Joint Secretary SPDA, mentions that in Telangana, there are about 3,600 MW of solar projects and the cumulative dues from the DISCOMs as of June 2019 is to the tune of ₹14 billion ($203 million). The dues have been piling up from July 2018, the SPDA letter mentions.

The huge dues have resulted in a liquidity crunch for most of the developers, and these are also affecting their daily operations and debt servicing timeline. The letter has also mentioned that the developers were forced to infuse unsecured loans to service their rising debts and daily operational expenses.

Since the developers have invested heavily in the equity for these projects, the lack of rotation of money due to this non-payment by DISCOMs is preventing them from participating in fresh tenders. “Lack of competitiveness does not ensure a fair price discovery in these tenders,” the letter said.

Investors, both Indian and international, are reluctant to invest further in the sector, and there is a huge risk of projects turning into Non-Performing Assets (NPAs), the SPDA letter has cautioned.

The association has requested the ministry to issue an advisory to the DISCOMs for the immediate release of at least three months of payments, to enable the developers, sustain and service debts to a limited extent.

The association has also mentioned that in the absence of a resolution at the earliest, the developers would be left with no option but to look for legal recourse.

Recently, Mercom reported about the Indian Wind Power Developers Association raising similar concerns of non-payment of huge dues by the DISCOMs in Rajasthan.

Moreover, the recent order issued by the Andhra Pradesh government for revisiting Power Purchase Agreements (PPAs) for solar and wind projects, also admits that its DISCOMs owe developers nearly ₹200 billion ($2,880 million).