Defaulting discoms will face disconnection: RK Singh, power minister

The new rules for discoms, which will lead to an automatic disconnection if there is a default on payments, are transformational, says Union power minister R K Singh. He told Shobhana Subramanian, the rules will also help the discoms save large sums if they pay promptly. The minister also said that imports of coal having begun across states and central gencos and that the coal reserves should be adequate for the monsoon.

What is the progress on the revamped distribution sector scheme? We have approved sanctions for proposals worth Rs 1. 92 trillion from 19 states and UTs for smart metering, infra upgrades and so on. The total available assistance under the scheme is Rs 3.

1 trillion. There are some sops built into the new rules … We have just issued the rules and discoms have a month to get into the agreements with PFC and REC, if they want to pay the dues to gencos (Rs 1. 2 trillion at last count) in installments.

They stand to save thousands of crores if they pay the legacy dues in installments and, if they pay on time, the late payment surcharge will not be levied. They also get a 2% discount on the tariff for prompt payments of the current dues. We have provided for funding by REC and PFC in case they want to avail of the installments system.

If you don’t choose the installment option, the payments made will be adjusted against legacy dues, so there will be a default on the current dues. What is the penalty for a default? First, the access to the exchange will be cut off if they default either on current dues or legacy dues. In the next month, the long-term access gets cut by 10% and so on.

This is a big transformation because the system is automatic and it will force the discoms to act responsibly. The enforcement is automatic and as per the rules, the load dispatcher is bound to do it. And if a discom violates the rules, it gets punished, and even the ministry cannot interfere.

Now if any state announces free power, we are not worried because if they don’t pay up, the connection will be disconnected. What has been the response from states for the 8,000 MW capacity lying idle without PPAs? The response to the proposal, by which the lowest bidder would have got the allocation, has been muted so we are re-designing the scheme and will soon reach out to the states. We will make available quantities of power at certain rates.

Of the total 17,500 MW based on imported coal, for 3,000 MW, banks and CoCs were to ask NTPC to run the units. What is the progress on this? This is work-in-progress, we are talking to the banks. What is the position on imports of coal for blending? CIL has already floated the tenders.

NTPC and DVC are using 9-10% of imported coal for blending purposes. NTPC has placed orders for about 20 million tonne (MT) and has received 5. 1 MT.

As far as states are concerned, Tamil Nadu, Maharashtra and Gujarat have placed the orders after calling for bids. Some like Andhra Pradesh, Haryana and Punjab have called for bids. All of them have also given indents to CIL.

The central gencos will import 23 MT and the states will import around 10 MT. How prepared are we for the monsoon? Right now, the equation has changed for the better because the demand for power is slightly less than it was this time last year. We will need to import coal because when the full-blown monsoon hits mining areas, the daily arrivals of coal will fall .

We will need to fall back on the reserves of which we have some 24 MT. Is there a need to review the cap of `12/unit for power sold on the exchanges? We don’t see any need to review it just now. In the past few days the price on the exchanges has been around Rs 4.

50 per unit. There has been good progress on the renewables front… In energy terms, the contribution of non-fossil energy has gone up from 24. 8% to 29.

8% in the past month. In capacity terms, the contribution is 41%. We are one of the lowest emitters in the world.

We had said by 2030 we would reduce the emission-intensity, as a share of GDP, by 35%, we have reached 33%. We are the fastest growing renewables country and we are also creating storage. How much thermal capacity are we creating? We have thermal capacity under construction of around 28,000 MW and another 20,000 MW where the land has been acquired and the clearances are in progress.

We will complete this. Our demand has grown 25%, in energy terms, month back. The average consumption per day was 4,500 billion units between May 15 and June 15, compared with 3,500 billion units in the same period last year.

We have added 28. 6 million consumers. We will make sure there is power to meet development needs, that is non-negotiable.

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