India's renewable energy ministry to publicly disclose payment delays

India's Ministry of New and Renewable Energy (MNRE) has said it is considering setting up a web portal to publicly disclose payment delays to renewable energy companies from power distribution companies.

This portal will be similar to the Payment Ratification and Analysis in Power procurement for bringing Transparency (PRAAPTI), which is a website that does the same thing for the energy industry in the country. 

PRAAPTI was launched last year and its aim is to introduce transparency by revealing the monthly overdue bills to power generation companies from power distribution companies (Discoms). Discoms are given 60 days by energy companies time to pay their bills for the supply of electricity. After that period the outstanding amount is considered overdue and the Discoms are charged interest on their overdue amounts. 

In the southern states of Telangana and Andhra Pradesh, Discoms are owing more money to renewable energy generation companies. This is affecting wind and solar producers in these two states, where they are expecting 8-11 months of dues, while some producers in the state of Tamil Nadu are owed over 15 months of payment. 

According to The Hindu, the Discoms in Telangana and Andhra Pradesh are increasingly dependent on state support. And delayed payments to the Discoms would in turn lead to late payments to the renewable power producers. 

In the meantime, the power producers are surviving on a mix of available working capital facility and debt, besides funding support from their parents. 

Separately, a Discom has been warned by the authorities over its tardy payments to its suppliers. Maharashtra State Electricity Distribution Corporation Ltd. (MSEDCL) was cautioned by the state's regulatory commission for delayed payments to power producers. Two wind farms had filed petitions against MSEDCL for not keeping up with its payment obligations. This includes outstanding delayed payment charges. The commission warned MSEDCL that if it fails to pay the oustanding amount it would be penalised with an interest of 1.25% per month on the sum. 

Click here to listen to our RIABU's Simon Littlewood and Mark Laudi discuss what companies struggling with insufficient cash flow can do to ensure they get paid on time.