One government company moves NCLT against another

In what is being considered as a first in India’s insolvency resolution history, a state-owned entity has moved the National Company Law Tribunal (NCLT) to recover its arrears from another government-run firm.

Andhra Pradesh Power Generation Corporation (AP Genco) has dragged a Telangana power distribution company to the tribunal, seeking to recover more than ₹3,700 crore through insolvency proceedings.

AP Genco has filed its petition before the NCLT’s Hyderabad bench against Northern Power Distribution Company of Telangana under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the corporate insolvency resolution process.


The power generation firm had earlier claimed around ₹4,000 crore from Telangana’s power distribution entities against supply of power for over three-and-a-half years and threatened to stop power supply. It subsequently discontinued supplies.

Telangana, carved out of Andhra Pradesh in June 2014, needs more power than AP, primarily owing to high demand from its industrial units and agricultural consumers, who depend heavily on groundwater for farming.

The undivided AP had power generation capacity of 16,465 MW. After the state bifurcation, more than 60% of the power plants by capacity became part of the residual AP and Telangana got less than 40% as its share.

Though most power generation stations were geographically located in AP, the two states, AP and Telangana, were asked to share power in the ratio of 43.11% is to 56.89%, respectively, based on a formula computed on past usage. While AP was producing power and supplying to Telangana since the state bifurcation, it didn’t receive payments from the new state.

AP energy secretary Ajay Jain had in June last year told ET that Telangana had initially agreed to clear the dues, but then raised certain disputes over the amount. Viewing that power generation involved high costs and that it was unviable to produce electricity for Telangana without any payments, AP had subsequently discontinued the supplies. Confirming the insolvency petition filed before the NCLT, AP Genco MD K Vijayanand told ET: “Telangana power utilities have to pay us around ₹3,700 crore and we have moved the NCLT after exhausting all the options before us to recover those dues.”

The chairman of Telangana’s power generation and transmission utilities, D Prabhakar Rao, didn’t respond until press time Thursday to a text message seeking comment.