A period of 60 days is given by power producers to DISCOMs for payment of electricity supply bills, post which, power generators charge penalty interest for overdue payment in most cases
To ease the financial burden on DISCOMS, the Power Ministry on Saturday advised all power generation companies and transmission companies not to charge late payment surcharge (LPS) at a rate above 12% for payments under the Liquidity Infusion Scheme of Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) under the Atmanirbhar Bharat campaign, while adding that the LPS in many cases had swung as high as 18% to adversely impact DISCOMs amid lockdown.
“In general, the applicable rate of Late Payment Surcharges is quite high despite the fact that interest rates in the country have softened over the last few years”, the ministry said.
A report stated the total outstanding dues owed by distribution firms to be ₹1.33 lakh crore in June 2020 – an increase of more than 47% year-on-year from ₹90,655 crore in June 2019, which indicated stress in the sector. Citing portal Payment Ratification And Analysis in Power procurement for bringing Transparency in Invoicing of generators (PRAAPTI), the agency said that the distribution companies (DISCOMs) owed a total of ₹90,655 crore to power generation firms in June 2019. Usually, DISCOMs are given a period of 60 days by power producers to pay electricity supply bills, post which, power generators charge penalty interest for overdue payment in most cases.
The Ministry added that the government had announced steps to ease the impact on the liquidity position of the power sector particularly distribution companies such as rebate on capacity charges, relaxing provisions of the letter of credit for scheduling of power, liquidity infusion scheme, etc. The liquidity scheme worth ₹90,000 crore was announced in May by Finance Minister Nirmala Sitharaman under which the government looked to infuse the amount in DISCOMs. However, The Financial Express reported that independent power producers including Tata Power, Bajaj Energy, KSK, and Hindustan Power, earlier this month had rejected the Uttar Pradesh government’s proposal of settling state DISCOMs dues to them contingent on the producers offering tariff rebates for past supplies.
