NTPC Offers Rs 1363 Cr Discount on Fixed Charges to Discoms During Lockdown

NTPC will be giving a discount of Rs 1363 crore to Discoms on fixed or capacity charges that they owe during the lockdown period this fiscal year.

NTPC Limited, the largest electricity generator in the country has announced that it will be giving a discount of Rs 1363 crore to distribution companies (Discoms) on fixed or capacity charges that they owe during the lockdown period this fiscal year. The fixed charges are paid by Discoms under power purchase agreement for the cost of setting up of a power plant.

As per the company announcement, its Board has also approved deferring the collection of Rs 2,064 crore fixed charges from discoms till the end of lockdown, imposed to contain the coronavirus pandemic. The charges would be collected in three equal installments without any interest, the PSU said.

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The revenue collection of power distribution companies was hit due to reduced industrial activity after the lockdown was imposed to contain the spread of COVID-19 in the country. The government had subsequently announced a liquidity infusion of Rs 90,000 crore through REC and Power Finance Corp into crisis-hit Discoms. The liquidity shot will be securitised against the receivables of Discoms from consumers.

NTPC said that its board of directors in a meeting on June 9, 2020, “approved deferment of capacity charges of Rs 2,064 crore to Discoms, to be payable without interest after the end of the lockdown period in three equal monthly instalments.” The board also approved a rebate of Rs 1,363 crore on the capacity charges billed during the lockdown period to discoms on account of COVID-19, in the financial year 2020-21, it stated.

The PSU on May 17, 2020, had announced that it would consider deferment of capacity charges and rebate to distribution companies and a rebate of 20-25 percent on fixed charges to discoms following the direction of the power ministry.

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Earlier this month, Union Minister for Power, RK Singh had said that there is a need for the state governments to be also conjointly responsible for the financial health of their fully owned power Discoms. Singh highlighted to the Finance Commission headed by N.K. Singh, the current disconnect in the structures of the power system between decision making by the state government and the financial consequences thereof, which are borne by the Discoms leading to losses.

While stressing on the need for state government’s responsibility, Power Minister said “the borrowing limits of the state governments under the FRBM Act, needed to be recalibrated to take these liabilities into account. This would bring to fore the responsibility of the state governments under whose control the Discoms operate.” He further added that it will also bring financial transparency and bring about financially and managerially responsible behaviour of the States with respect to Discoms.

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