NTPC issues disconnection notices on BSES discoms

India's largest energy company NTPC has issued disconnection notices on five discoms across four states and asked two power distribution companies of the Delhi government and Reliance Infrastructure to clear Rs 1,864 crore of overdue electricity payments or face corporate insolvency proceedings, according to payment notices.

As per sources, notices for encashment letter of credits (LCs) are likely to be served on discoms of Telangana, Madhya Pradesh and Assam, indicating the government's resolve to enforce financial discipline among discoms.

Aravali Power Company (APCPL), a joint venture of state-owned NPTC, Indraprastha Power Generation Co Ltd (IPGCL), and Haryana Power Generation Corp Ltd (HPGCL) have issued separate payment notices on BSES Yamuna Power Ltd (BYPL) and BSES Rajdhani Power for defaulting on payments for the electricity they buy from its Jhajjar plant.

Government distribution companies of Jammu & Kashmir, Puducherry, Sikkim, and Karnataka utilities Hubli Electric Supply Company (HESCOM) and Chamundeshwari Electricity Supply Corporation (CESCORP) have recently been sent notices by NTPC for disconnection, called regulation in industry terminology, for not having LCs.

NTPC, through its subsidiaries, sought Rs 865 crore from BYPL and Rs 999 crore from BSES Rajdhani Power Ltd (BRPL) for power bought up to March 2020. Dues after this period are not being pressed by NTPC as the period has been classified as the "pandemic-hit era".

Since both the utilities have LCs, NTPC could utilise the option of encashing them or initiate insolvency proceedings under the Insolvency and Bankruptcy Code, if the utilities do not clear their dues within 10 days of the notice.

Among the state utilities, J&K is the biggest buyer at 1,118 MW (megawatt) followed by HESCOM at 548 MW, TESCOR at 230, Puducherry at 213 MW and Sikkim at 99 MW.

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