Added that sustained delays could put Rs 30,000 crore of debt in stress
New Delhi: Payment risk from discoms has resurfaced for wind power projects, with Madhya Pradesh, Maharashtra, Rajasthan and Andhra Pradesh toting up dues of Rs 5,450 crore to 156 renewable projects as of January 2021, according to CRISIL.
It added that this was an increase of about 50 per cent in the dues on-year. These four states act as a counterparty to about 40 per cent of the overall wind capacity.
The CRISIL note said that wind power projects, constituting nearly three-fourth of the total private renewable capacity of these four states, have borne a larger share of the payment delays.
“The reason being, bulk of these are old projects, with high tariffs of over Rs 4.5 per unit, handed out under the earlier FIT regime.
These tariffs are higher than the average power purchase prices of these states,” it added.
According to Manish Gupta, senior director, CRISIL Ratings, “For wind power projects rated by CRISIL, the aggregate receivables period from these state discoms has increased to nine months from the invoice date, compared with three to five months on average at March 2020. For projects in Andhra Pradesh, it has stretched to as much as 18-19 months.”
The ratings agency said that these payment delays were due to persisting weak financial health of discoms, which deteriorated in 2020 due to lower collections from customers amid the pandemic.
Although collections have recovered from the lows of the first quarter of the current fiscal, these remain below the pre-pandemic levels.
“So far, wind power developers have been able to manage cash-flow pressures on servicing with the help of the Reserve Bank of India-announced moratorium on debt servicing or surplus liquidity from the previous fiscal,” it said.
However, sustained delay of one more quarter could test the liquidity buffers – typically of six to nine months in these projects, making them vulnerable to delays.
“This could put nearly Rs 30,000 crore of debt in 9.5 GW of wind power projects at risk of delays.
The remaining 6.5 GW of wind power projects are present in large groups and hence have greater flexibilities to manage delays, given their balance sheet strength and diversity from other counterparties in the overall portfolio,” added CRISIL.
Ankit Hakhu, director, CRISIL Ratings, said that going forward, the liquidity position of discoms is expected to improve with collection efficiencies coming back to normal, along with the release of state government subsidies, which typically picks up pace towards the end of a fiscal, which could help restore the payment cycle to pre-pandemic levels.
Source: economictimes
