The Central Government has barred 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. These states, which include some of the most active ones like Maharashtra, Madhya Pradesh, Karnataka, Tamil Nadu and Rajasthan, could see large-scale power outages if they do not pay up quickly.
In addition to this, this move could make power outages more common in the affected states which are Telangana, Tamil Nadu, Rajasthan, Jammu and Kashmir, Andhra Pradesh, and Maharashtra. Also includes, Karnataka, Madhya Pradesh, Jharkhand, Bihar, Chhattisgarh, Manipur, and Mizoram.
Accordingly, this move is the result of the rules framed by the Ministry of Power for non-payment of dues by the discoms and gencos. Under the new Late Payment Surcharge (LPS) rules, this action will be applicable from August 19.
As per the reports, the LPS rules bar discoms from power exchanges if they don’t pay pending dues to gencos for over 7 months. Discoms from the 13 states will attract action under the new LPS Electricity Rules.
Further, buy and sell transactions in all products of power market are restricted for discoms with high dues.
This news put the power stocks under pressure as volumes traded on the exchange in the near term could get affected.
This is the first time over a dozen states have been barred together.
Notably, the total pending dues of state discoms to gencos are Rs5,085 crore.