New Delhi, August 13: NEW DELHI: The Central Government disagrees with Uttar Pradesh ‘s recent proposal to conduct unique online auctions among power plants under which the state seeks rebates from private producers in power bills to disburse payments faster.
“The Union power ministry is clear that nobody can alter contracts like this,” a government official said adding that the ministry will soon communicate its stance to Uttar Pradesh.
The payments are made via loans issued under the Atmanirbhar scheme by Power Finance Corp and REC Ltd under the Rs 90,000 crore liquidity infusion package from the Centre. Under the system, payments to power producers are made directly by PFC and REC but the financial institutions are directed by state distribution utilities.
The additional chief secretary of Uttar Pradesh, Arvind Kumar, recently wrote to Union Power Minister R K Singh and Union Power Secretary Sanjiv Sahai requesting assistance from the Center for the proposed e-auctions. The step, being the first time any state has ever asked power plants to bid to get payments for power supply, also shocked the power industry.
“Uttar Pradesh is in the process of developing an online and transparent bidding process claiming to give upto 75% of private plant’s dues in the first tranche of the loan depending on the rate of the rebate they offer. Those plants that will not offer rebates will get paid in the second tranche of disbursement by PFC and REC,” an official said.
Under the liquidity scheme, Uttar Pradesh has been approved with a loan of Rs 20,940 crore, half of which will be paid out now and half in the second trache when the state meets agreed conditions.
A senior Uttar Pradesh government official said the move was being taken to keep the distribution companies in the position of the state’s cash crunch. Nonetheless, the power industry said the proposed offer from Uttar Pradesh amounts to arm twisting and hurts feelings regarding state investment.
Last month the Union Power Ministry issued a direction to PFC and REC asking them to disburse the sum approved under a liquidity infusion package in a proportionate manner between state-run and private thermal and renewable plants. Meanwhile, the Center is preparing to expand the liquidity program for the April , May and June 2020 months to cover dues.
