Power ministry asks gencos, transcos to cap late payment surcharge at 12 pc

In order to alleviate the financial stress of the power system, the Ministry of Power has advised all generating and transmission companies to charge late payment surcharge (LPS) at a rate not exceeding 12 per cent per annum (simple interest) for all payments made under the Liquidity Infusion Scheme of the PFC and REC under Atmanirbhar Bharat.

In order to alleviate the financial stress of the power system, the Ministry of Power has advised all generating and transmission compes to charge late payment surcharge (LPS) at a rate not exceeding 12 per cent per annum (simple interest) for all payments made under the Liquidity Infusion Scheme of the PFC and REC under Atmrbhar Bharat.

With this measure, the financial burden on discoms will ease out.

According to an official release, 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 rate of LPS in many cases ranges up to 18 per cent per annum and has adversely impacted discoms during this difficult phase of lockdown imposed on account of the COVID-19 pandemic

The COVID-19 pandemic has adversely affected the liquidity position of all stakeholders of the power sector especially the power distribution compes.

A number of measures have been taken by the government to mitigate the adverse impact which includes a rebate on capacity charges, relaxing provisions of Letter of Credit for scheduling of power, Liquidity Infusion Scheme, etc.

One of the measures taken is with regard to LPS, which becomes applicable in case of delayed payments by distribution compes to the generating compes and transmission licensees for power purchase/ transmission of electricity for the period up to June 30, 2020.

This will help consumers by maintaining a smooth power supply and reduction in charges despite the difficult times.

( With inputs from ANI )