Even small transformer repair contractors, worst hit by the coronavirus outbreak, await clearance of dues by State DISCOMs.
Lucknow, August 16: As did the private thermal power producers earlier, the equipment suppliers also raised their voice against non-payment of dues by UP’s five power distribution entities. The equipment suppliers, many of them being MSMEs, claimed unpaid dues piling up to ₹2,000 crore since the last 4 years by the DISCOMs.
Such undisciplined payment patterns by state have hurt smaller local industries who are facing unprecedented levels of liquidity crunch in the pandemic, and have pushed some larger suppliers into stopping business with them, said the industry sources.
“Most of these suppliers MSMEs have low cash reserves, and the state keeps clearing payments in very small instalments”, RK Chugh, President of the Indian electrical equipment manufacturers associations (IEEMA)
Private power plants still awaiting to receive large amount from state DISCOMs include Tata Power Bara’s unit (₹1,249 crore), Bajaj Lalitpur (₹3,370 crore), KSK Mahanadi (₹1,676 crore) and Hindustan Power Anuppur (₹ 1,306 crore), as reported by FE earlier.
The equipment suppliers lamented that while none of the 5 DISCOMs in the state have a satisfactory track record regarding payment clearance, they had to face the worst experience in Varanasi, followed by Agra and Meerut.
Pawan Jain, CEO, Kotsons, who has been in transformer manufacturing since last 40 years, says
“UP DISCOMs have the most complex system of clearing payments among all states and we are accustomed to the usual 4-6 months delay in receiving payments, but now the normal clearance time spiralled up to 18 months.
Seeing the irregularities in payments, we have decided not to get into business with UP government’s Power departments.”
Most of these equipment were supplied to cut down the losses, under various schemes of both the centre and state government to upgrade the distribution infrastructure. Although part payments for supplies under such schemes were made sporadically and with much delay, settlement of dues for supplies in projects implemented under the DISCOMs own capital expenditure plans were much worse.
Also, meters suppliers are due to receive around 500 crore of balance payments for products supplied more than 2 years ago. Out of the 40 lakhs meters planned to be installed by December 2020, 10.3 lakhs have already been installed by the State. It also has targets to meter all 16.41 lakhs un-metered consumers in the next 2 months.
Amit Kumar, chairman of IEEMAs Energy Meter division said, “If the outstanding dues is not cleared, small players will not be able to buy parts and equipment, and cannot quote for new supply tenders.”
As the government intends to gradually replace all the 270 million meters with smart meters, the local meter makers plan to ramp up their production capacity to cut Chinese imports that have hit a road block due to the unavailability of funds.
Over 60% of the electricity meters, parts and accessories imported in 2019 were from China due to its low cost, according to research firm Crisil.
