Power producers ask FM for financial support to revive sector

One of the biggest challenges that has afflicted power companies are the large overdue of receivables pending over long time, including regulatory dues. Recovery of such dues are inordinately delayed due to multiple litigations by the Discoms as a strategy to delay their payment obligation.

The power sector, which would have a pivotal role in achieving the target of a $5 trillion economy by 2024, is presently suffering from stress due to systemic issues and is facing challenges with financing, thereby resulting in waning of investment appetite.

Association of Power Producers (APP) has suggested several initiatives on the financing side which, when coupled with policy and regulatory changes currently under consideration, can remove stress and re-energize the sector.

Unlocking funds stuck in arbitrations and receivables from government

Orders issued by regulatory forums are challenged as a matter of routine and honouring directions for interim payment issued by regulatory commissions are rare; even such orders from appellate tribunals are not adhered to in many cases and mostly end only at Supreme Court.

“A mechanism or policy framework needs to be formulated, in lines of MSME Act and Consumer Dispute Resolution Act, wherein at least 75 percent of the claim amount has to be paid by any party in order to file an appeal challenging the orders of regulatory commissions. The amount can be adjusted in future once the final judgement from higher courts are given,” Ashok Khurana, Director General of APP, suggested in a letter to the Finance Minister Nirmala Sitharaman.

This becomes essential to stop frivolous appeals, provide some sanctity to the orders of the tribunal and commissions, eliminate the inordinate delay in realising the money and huge relief to the cash strapped infrastructure sector, APP said.

On-tap targeted long term-repo operations