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Central govt barred about 13 states including Maharashtra, TN from power exchanges till they clear their dues

Indian Government has blocked nearly 13 states from buying or selling electricity on power exchanges until they clear their current bills from power plants. It is a clear signal from Centre that they will have to clear accumulated dues and pay regular bills on time.

By Ruchi Upadhyay 
Updated Date

New Delhi: Centre has taken big action against those states whose dues are not clear. As many as 13 states could soon be left fumbling in the dark after being barred from buying and selling on power exchange platforms till they clear their dues to power plants. The states facing action are Tamil Nadu, Telangana, Madhya Pradesh, Manipur, Mizoram, Jharkhand, Bihar, J&K, Rajasthan, Andhra Pradesh, Maharashtra, Karnataka, and Chhattisgarh. They together owe Rs 5,085 crore

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Thirteen provinces won’t be able to buy or sell electricity at power exchanges until they pay their dues to generators and transmission companies, according to S.R. Narasimhan, chairman at Power System Operation Corp., the country’s central grid operator. Rules introduced in June say that state power retailers will lose access to short-term sources of electricity if they fail to pay within two-and-a-half months from the date bills are raised.

India’s loss-making, state-run retailers are often seen as the weakest link in the country’s electricity industry, causing distress that trickles through the chain, from power producers, to coal suppliers and project lenders. Nearly 90% of the nation’s electricity is sold through these utilities and their inability to pay on time is seen as impeding investments to modernize infrastructure and provide reliable power supply.

Prime Minister Narendra Modi’s government, which is working on a plan to turn these utilities around, put out new guidelines earlier this year that empowered the national grid operator to curtail access to power sources for distributors who have defaulted on payments.

States including Madhya Pradesh, Maharashtra, Chhattisgarh and Tamil Nadu have been barred from accessing power exchanges, Narasimhan said in a text message.

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“States will lose out on any opportunistic trade at the exchanges and will be forced to pay up,” according to Rupesh Sankhe, vice president at Elara Capital India Pvt. in Mumbai. “Such tough measures are necessary to bring in payment discipline in distribution companies.”

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