Modi Government Plans New Mechanism To Revive Stressed Power Assets, To Generate At Least Rs 15,000 Crore 

In a bid to relieve power sector stress, the central government plans to auction power supply contracts with attached coal suppliers, permitting coal usage for short-term power contracts and tweaking the payment mechanism to help power projects recover dues from state electricity distribution companies on time reports The Economic Times.

The new payment mechanism will release almost Rs 15,000 crore owed to private sector companies. Private sector usually grapples with delayed payments up to six months by the distribution companies.

A draft for amendment of the national tariff policy is also in the pipeline and it is likely to address the regulatory issues. It is also mooted to take up consumer-friendly measures, including penalising distribution companies for power cuts. The proposal also is likely to fix a 15 per cent cap on passing on technical losses to electricity tariffs.

The 40th standing committee on Energy had estimated that bulk of private coal-based operators (60,000 -65,000 MW out of 75,000 MW operational projects) were under stress. and this move is likely to pave way for relief to the ailing private players.