Renewable power cos’ dues surge 47% to Rs 21k cr in 1 year

NEW DELHI: Overdues of renewable power producers have swelled 47% to Rs 21,008 crore in December from Rs 14,259 crore a year ago because of continued payment default by state distribution utilities, marking a trend that could punch a hole in India’s climate commitment, which primarily hinges on rapid expansion of green energy capacity.
The renewable energy overdues make up 21% of pending bills from all generation companies, including thermal power producers in the private and public sector, which is pegged at Rs 98,682 crore against Rs 97,334 crore a year ago.Given the trend, officials said the figure will top Rs 1 lakh crore by month-end.
Thermal generation companies account for Rs 75,066 crore of the total overdues. While overdues of private power producers rose 38% to Rs 54,394 crore from Rs 39,152 crore in December 2020, they declined 55% to Rs 20,672 crore from Rs 46,969 crore for government generators.

The ballooning of unpaid bills underlines the fact that bailout packages and turnaround plans have not been able to bring about the desired change in the system as far as improving revenue of generation companies.
Continued overdues of private power producers, especially thermal companies , facing increased redundancy risks due to rising renewable capacity, perpetuate the threat of loans souring for lenders, which could dampen future lending.
Delayed payments sends projects into a vicious cycle by raising cost of operation, prompting borrowings that in turn raises interest costs that can ultimately lead promoters to default.
The rising dues of renewable energy companies may inhibit capacity building at a time when India needs huge investments for meeting the target of 450 GW (gigawatts) renewable capacity by 2030, which is at the core of its climate action and Net-Zero goals.
The conundrum of thermal producers is aptly summed up by an industry executive, who said: “Public sector thermal generators can afford to regulate supply, encash LCs (letters of credit) with banks or adjust outstandings from the state’s funds with the RBI. Independent power producers, especially the smaller players, which have their plants in the state they supply to, cannot afford such a move for fear of retaliation or harassment by that state government,” an industry executive said, requesting anonymity.