IL&FS Tamil Nadu Power Company Ltd. raises concern over delayed payments from Tangedco

State power utility is not making payments as per the directives of the Union Ministry, says official

February 12, 2024 08:57 pm | Updated 08:58 pm IST - CHENNAI

ITPCL has a long-term power purchase agreement with Tangedco for a contracted capacity of 540 MW.

ITPCL has a long-term power purchase agreement with Tangedco for a contracted capacity of 540 MW.

IL&FS Tamil Nadu Power Company Ltd. (ITPCL), an imported coal-based plant that supplies power to Tamil Nadu Generation and Distribution Corporation (Tangedco), has raised concerns over the State power utility not making payments as per the directives of the Union Ministry.

Tangedco has not been paying ITPCL on a weekly basis as per the Union Power Ministry’s directive, but only after 75 days of the invoice. The amount involved is in the order of ₹450-500 crore for 75 days lag against the power supplied by ITPCL, a spokesperson from IL&FS Group said.

It is affecting cash flow of ITPCL, where advance payment has to be made for fuel supplies as well as meet all operating and maintenance expenses and the upkeep of plant to ensure uninterrupted supply under section 11, Electricity Act, he said.

ITPCL has a long-term power purchase agreement with Tangedco for a contracted capacity of 540 MW.

Initially, in May 2022, the Union Ministry of Power (MOP) directed imported coal-based power plants to operate and generate at their capacity amid an increase in power demand and a mismatch in demand and supply of domestic coal. It was issued under Section 11 of the Electricity Act, 2003.

As per Section 11 of the Electricity Act, the government may, in extraordinary circumstances, ask a generating company to operate and maintain any station in accordance with its directions.

Since the power purchase agreements of the plants do not have adequate provisions for passing through the increase in international coal prices, the Power Ministry constituted a committee to determine the energy charge rate.

The Ministry of Power issued the benchmark energy rates for selected imported coal-based plants, including ITPCL, every fortnight from May 2022 onwards.

The directives have been extended from time to time, and the latest extension is until June 30, 2024.

ITPCL has also written to the Southern Regional Power Committee on the issue.

IL&FS Group spokesperson said the other issue had been that the benchmark rates determined by the Committee and revised every fortnight was not covering the actual energy cost incurred in generating power.

The problem with the benchmark rates had been represented to the MoP regularly and ITPCL had a meeting with the Central Electricity Authority (CEA) on this and the problem was explained. “The problem remains unresolved and ITPCL is hoping for an early resolution of the issue from MoP or through an order from Central Electricity Regulatory Commission to tide over the crisis,” he added.

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