The states are reluctant to pay debt dues of electricity generators. They want the PPAs for solar and wind energy to be renegotiated against the recently discovered price through competitive bidding.

To address the problem of mounting dues of the independent power producers (both conventional and renewables) from the state Discoms the ministry of power had ordered that Power shall be dispatched by the National loads dispatched centre and Regional load dispatched centre only on the production of a letter of credit (LC) for the desired Quantum of electricity by the state discom. Also defaulters won’t be able to buy from any other sources including the power exchanges. Thus said order made discoms liable to pay compensation to the generators.

But recent Andhra Pradesh high court guideline set aside the centre’s order according to the High court the centre has overreached its power accorded to it under electricity act 2003.

This situation is likely to drive many of the small players of solar and wind energy into bankruptcy as they will not be able to service their debt if Power is not schedule from them.

Further the High court judgment will come as a hurdle in attracting investment in green energy and achieving India’s target of renewable energy.

And in the current situation an appeal in the supreme court will be time consuming. The only alternative route available with the centre is the enactment of electricity bill 2021. But it is seen that there is already wide divergence between centre and state on this issue. So the policy maker needs to look at a long-term solution keeping in mind that electricity is in the concurrent list of the constitution.

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