INR 900 Billion For Indian Electricity Discoms

• India has set aside INR 900 billion for discoms under the country's INR 20 trillion economic stimulus package under the pandemic's impact
• Money will be released against state guarantees for discoms to pay off their dues to transmission and generator companies
• PFC and REC will be releasing this money in 2 installments, stated the Finance ministries

The Government of India has announced an economic stimulus package of INR 20 trillion ($266 billion) to help the economy beat the stress of the COVID-19 pandemic, most of it reserved for Micro, Small & Medium Enterprises (MSME) in a bid to encourage a self-reliant India. Prime Minister Narendra Modi focused on going local in his speech to the nation.

There is nothing specific for the renewable energy industry in the package, however there is a glimmer of hope for renewable energy generators. The government has set aside INR 900 billion ($11.87 billion) out of the total package for electricity distribution companies (discoms).

Releasing details of the package, the country's Finance Minister Nirmala Sitharaman said the INR 900 billion will be used by discoms to pay their dues to transmission and generation companies. Central public sector enterprises (CPSE) will give a rebate to discoms provided the latter pass on the same to the final consumers as a relief towards their fixed charges.

Liquidity injection to the discoms, said Sitharaman, will be made through the Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) in 2 equal installments. Money will be disbursed against state guarantees.

However, Indian discoms generally do not have a good reputation when it comes to paying renewable energy generators, and this has been a bone of contention between the generators and discoms. During the ongoing COVID-19 pandemic, and also earlier, some discoms resorted to curtail power generation from renewable energy projects forcing the Ministry of New and Renewable Energy (MNRE) to step in to ensure must run status for clean energy projects.

Referring to the Ministry of Power's data, Mercom India Research says till the end of March 2020 discoms owed renewable energy generators INR 68.37 billion ($914.5 million) in outstanding payments, including INR 311 million ($4.2 million) under dispute.