It’s not a hard thing to envision: state distribution companies (DISCOMs) don’t have the money to pay their independent solar power contractors. So they default. And default. And… default. Then, when it’s gone on for x number of months, they still don’t have the money (for whatever reason- it’s a government department), so they divert the equity for funding the projects, using it to shore up the payment shortfall instead.

And what, in the interval, does the contractor company do? Well, they’re not getting paid. Intentions ain’t gonna pay for the work- so they stop. And that puts in a pin in solar energy production for those x number of months.

Don’t bother envisioning it; it’s a real thing that happens all over India.

But now, fingers crossed, there might be a solution. The National Solar Energy Federation of India (NSEFI) has written to the Minister for Power, New and Renewable Energy, RK Singh, requesting a fund to provide liquidity to DISCOMs. Because, surprise, non-payment of dues can affect independent contractors.

Many prominent state DISCOMs are running large outstanding dues of over six to nine months to solar power producers. In the case of one major state, the dues for July 2018 onwards remain unpaid. Working capital lines are not available to the industry to take care of these inordinate delays.

NSEFI’s letter to RK Singh, as quoted in Mercom India

Diverting the equity is a stop-gap solution; more than that, it adversely affects the DISCOMs’ ability to kick-off new projects due to lack of funds. Simply put, creating a liquidity fund means creating a dedicated source of cash for payments during periods of shortfall, so it wouldn’t pinch the DISCOMs’ equity and readiness to commission new projects and bring new players onboard. The result: more solar energy for everyone!

What do you think? Let us know in the comments!

Posted by repowerindia

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