The new scheme, replacing the rise schemes, will revitalize the power sector

Private electricity makers, outraged by the pending payment of bills by the state power distribution company (DISCOMs), are on the verge of dragging DISCOMs to the National Company Law Tribunal. By the end of December 1, DISCOMs were owed Rs 5 crore to power generating companies. About 5% of the amount paid by DISCOMs was to be paid to private power producers while the remaining amount was to be paid to government undertakings like NTPC, DVC and NHPC. Due to such huge amount, the country's power sector has come under heavy pressure. One of the reasons for the high balance of payments being made is the loss made by Discos.

The Ujjwal DISCOM Assurance Scheme (UDAY) was implemented by the Center in order to save the country's electricity sector. In the early years after the scheme was implemented, the loss of DISCOMs was significantly reduced but it has started to increase again and by September of the current financial year, the number of DISCOMs has increased by Rs. 1 crore. Which indicates that the purpose of the rise plan has not been achieved. The rise is coming to an end in March and the central government plans to bring a new scheme in place. States participating in the Udaya Yojana were required to reduce their aggregate technical and commercial losses but this was not possible. In view of this fact, the government plans to implement new schemes in which discosomes who fail to bring down aggregate technical and commercial losses are also expected to be denied funding from state-owned companies.

The amount required to pay electricity companies through DISCOMs has been increasing for the last two years. From the 1st of August, the Center has introduced the Letter of Credit. An attempt has been made to impose further discipline on payment of payment obligations on the Letter of Credit Mechanism Discoms, but it does not yield the expected result. Under the Letter of Credit system, DISCOMs are required to issue a letter of credit to electricity companies as a guarantee of payment.

Discoms have implemented the standard of providing letter of credit to power companies, but there has been a complaint from the power producers that the scheme is not uniformly implemented in every state of the country. States like Rajasthan, Andhra Pradesh and Telangana issue letters of credit, but before the encashment of this letter of credit, the power makers are conditioned to get permission for the discos. Thus, the standard of letter of credit in these states is proving ineffective

India has been witnessing widespread efforts to reduce carbon in the country through the production of electricity. The installed capacity of solar and wind energy has surpassed 4 GW which was 2 GHz in 5. There is huge investment from the Government of India and the private sector to build this capacity and it is expected to continue. From an investment perspective, renewable energy is no different than other structural features. Prime Minister Narendra Modi recently announced that the installed capacity of renewable energy will be increased to 4 GW by 5.

This will require investment of billions of rupees in India. The Prime Minister's ambitious plan to increase the installed capacity of renewable energy is welcomed, but according to a recent report, delays in payment of state power distribution companies (DISCOMs) and delayed tight money situation have added to the wind energy potential in the current fiscal year.

The addition of wind power capacity in fiscal year 1, which was 1.5 GW, is projected to increase to 8 GHz at the end of the current fiscal year, while achieving the target of delivering the installed capacity of wind power by 5 GW will be challenging. In view of this fact, the outlook for the wind energy sector has been negative from the stables. Delays in payment of past due payments from DISCOMs have posed widespread challenges to wind energy production companies. After the Letter of Credit scheme was implemented, the electricity makers have been receiving bills from the discos but they are getting the current month, not paying the previous dues.

Power generation companies are facing financial stress due to a delay in disbursement of dues previously paid by DISCOMs. Bank loan payments have increased the likelihood of defaults as companies' cash flows decline. The idea of ​​handing over DISCOMs to private companies has begun to get serious in the business of DISCOMs. This idea will only succeed if any political interference in the power distribution sector stops. The interference of political parties, especially the ruling parties, is responsible for the poor financial position of the DISCOMs.