Government sets up committee to explore prepaid payments by discoms to generator companies
A committee containing chairmen of distribution companies of Tamil Nadu and Maharashtra, representatives from Power Ministry and Power associations was set up under the Central Electricity Authority (CEA) to explore the prepaid payments by state electricity distribution companies to power plants.
Key Points
i. The aim of the committee is to study the working capital cycles of power distribution companies and generation companies so as to identify the gaps which are contributing to the stress in the sector.
ii. The Committee will also suggest a mechanism for the prepaid system of transactions after studying the regulations with respect to payment mechanism and transaction across the power sector value chain.
iii. In order to put in place a bill discounting mechanism ahead of General Elections, a Group of Ministers (GoM) headed by Finance Minister is also looking at the recommendation made by Cabinet Secretary P K Sinha simultaneously.
iv. PK Sinha committee had suggested that Financial institutions like REC (Rural Electrification Corporation) and PFC (Power Finance Corp) may discount receivables from discoms and make payment to generators.