Weak financials of Discoms hurdle to signing of power pacts: Scindia
Discoms are finding it difficult to raise working capital and owe Rs.2.46 trillion to banks and financial institutions
Jyotiraditya Scindia, minister of state for power with independent charge, admitted to the difficulty in getting companies that have been allotted captive coal blocks to sign the so-called power purchase agreements (PPAs) with state-owned power distribution companies (discoms) due to the weak financial status of the discoms. Power distribution companies are finding it difficult to raise working capital and owe Rs.2.46 trillion to banks and financial institutions. The power ministry proposed the signing of PPAs to ensure that power generation companies that are allotted coal blocks do not profiteer by selling the so-called merchant power at high market prices. In a typical PPA, pre-identified customers get electricity at a cheaper price for a long period. The plan hasnt made much progress as state discoms are not offering PPAs due to their weak finances. “I am very clear that if anyone has been provided a captive coal block for power generation, a PPA should be signed. But, however, there are no PPAs that are being offered, Scindia told reporters on Friday. “It is easier said than done because the state governments have to put out the tenders for competitive tariff-based biddings. As you have seen that Uttar Pradesh and Rajasthan have done so in the recent past.