Indian sites suffer from delayed payments

Wind and solar power generators in the three southern states of Andhra Pradesh, Telangana and Tamil Nadu are once again experiencing delays in payments from the distribution utilities.

Wind and solar generators in Tamil Nadu are experiencing delays in payments (pic: Thangaraj Kumaravel)
Wind and solar generators in Tamil Nadu are experiencing delays in payments (pic: Thangaraj Kumaravel)

While delays in payments had been quite common in 2015-2016, the last two years were relatively good as the utilities were paying on a more regular basis.

There were even some instances of utilities paying in advance to secure a discount.

However, despite getting the benefit of low tariffs, the three state utilities started defaulting on payments again in late 2018.

Speaking to a local media outlet, an executive at one of the major private renewable energy conglomerates said: "All of us, both big and small players, are facing payment delay problems, and this issue is escalating day by day.

"Andhra Pradesh, Tamil Nadu, and Telangana are the main culprits. In Tamil Nadu, there has been a delay of more than a year.

"In Telangana, the delay has been about ten months, and in Andhra Pradesh, it is about seven to eight months. These delays are for payments of both solar and wind power projects."

Utilities’ precarious financial situations are being blamed for the hold-ups in payment.

Tamil Nadu’s utility has a debt burden of INR 796 billion ($11.45 Billion) for the 2018 financial year, one of the highest among Indian utilities.

The state utilities in Andhra Pradesh and Telangana are also severely cash-strapped.

They have not filed for tariff increases for the past two years, relying instead on state subsidies to survive.

Some utilities were not even able to make payments to a national thermal power corporation.

Andhra Pradesh recently issued bonds guaranteed by the state government to raise funds for making payments.

The generators have been repeatedly petitioning the federal government for a sustainable resolution to the issue.

The ministry of power set up a new committee in November 2018 to study financial stress points for generators and utilities and provide new recommendations, including an assessment of new mechanisms such as prepayments by utilities to generators and independent power producers.

The committee's report has not yet been published.

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