Clear dues through liquidity window – IPP’s bold step

Clear dues through liquidity window – IPP's bold step

In this liquidity crunch, independent power producers (IPPs) of India are seeking a liquidity window up to March 31, 2020, through a special line of credit by the Power Finance Corporation to power distribution companies to clear their outstanding power bills of ₹50,000 crores.

This is done so that the IPPs do not have funds to buy coal or pay freight charges. Once the coal stocks at the plants deplete, they may have no other option but to shut down the plant till their liquidity window improves.

The Association of Power Producers has written to the GOI seeking the liquidity window through a special line of credit by PFC/REC for discoms to clear the outstanding power bills of around ₹50,000 crores up to March 3, 2020.

APP’s letter to Raj Kumar Singh, the Minister for Power, New & Renewable Energy, has also sought to request the Railways and Ministry for deferment of advance payment for coal and railway freight by way of suppliers’ credit and improve the liquidity window.

This comes at a time when the revenue collection by discoms has fallen by 80%, and payments to generators have also crashed due to the adverse impact of the COVID-19 pandemic, in order to ease the liquidity window.

Seeking special dispensation for the power sector, APP director general Ashok Khurana said, “With the lockdown restrictions continuing in many parts of the country and virus infections still on the rise, it is apprehended that revenue collection figures of May may be worse than in April.

Many generators have now reached a stage where they do not have money to buy coal, or pay salaries or pay for transport and LTA charges.”

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