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Power Sector is plagued by plethora of issues like poor financial condition, delayed payments, long pending dues, delay in adoption of tariffs by regulators, cross-subsidy etc. Recent move by Andhra Pradesh fovenrment has aggravated investor’s faith from the facet of honouring sanctity of contract. Government is concerned about building and regaining investor faith in the segment. Government plans to bring in ordinance that would ensure sanctity of contracts, restrict cross-subsidisation of consumers and force utilities to pay their bills on time.

Dues to power generators stand at Rs 81,426 crore, in implementation of ordnance, discoms would function on commercial principles and the states should disburse the subsidies on time and regulators would be truly independent to be able to enforce that payments are made by parties in time. After the proposed amendment, the parties to power contracts will not be allowed to stop supplying or taking electricity even in case of a dispute, till the time it is settled. This would empower state regulatory commissions to uphold the sanctity of all contracts executed between power producers and distribution companies.

This ordinance is likely to bring fairness, transparency and supporting the investment climate in the power sector.

This move by the government is likely to go a long way in making electricity generation and distribution attractive for investors.