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Renewable Power Projects: Clear energy dues, MNRE tells states

FE Bureau
Renewable Power, Renewable Power projects, energy dues, MNRE, electricity distribution

In the wake of rising dues from state-owned electricity distribution companies (discoms) to renewable power projects, the Centre has asked the states to clear their outstanding amounts as soon as possible. "The Ministry of New and Renewable Energy (MNRE) has constantly taken up the issue of timely payments with state governments and will continue to do so," Aanand Kumar, secretary, MNRE, told FE.

On September 2, power minister RK Singh had written to the chief ministers of Andhra Pradesh, Tamil Nadu, Telangana, Karnataka, Madhya Pradesh, Rajasthan and Maharashtra - the top seven defaulters to renewable energy projects - asking them to clear dues at the earliest to save these assets from becoming NPAs and preventing the possibility of discoms getting dragged to the NCLT.

"Timely payments by discoms to renewable energy generators are critical for the success and viability of these projects as total cost of the project is incurred upfront with no variable cost," Kumar said.

At July-end, combined dues of discoms to 26,725 MW of renewable energy projects, which submitted the relevant data to the Central Electricity Authority, was Rs 9,736 crore. Andhra Pradesh and Karnataka owe money even to the central government's Solar Energy Corporation of India.

Discoms' failure to clear dues to producers coincides with these cash-strapped entities reporting financial losses of Rs 28,369 crore at the end of FY19, up 89% year-on-year.

Care Ratings recently revised its rating outlook for 11 solar generators supplying power to Telangana from 'stable' to 'negative'. Out of these, ratings for two projects of Acme Solar was downgraded from A- to BBB+.

Crisil recently noted that the Andhra Pradesh government's move to revise renewable PPAs could put additional stress on about 5.2 GW of wind and solar energy projects with an estimated debt exposure of over Rs 21,000 crore.