Ministry Asks Power Generation Firms To Cap Late Payment Surcharge At 12%
Emissions billow from smokestacks at the NTPC Ltd. Badarpur coal-fired power plant as the sun sets in Badarpur, Delhi, India (Photographer: Kuni Takahashi/Bloomberg)  

Ministry Asks Power Generation Firms To Cap Late Payment Surcharge At 12%

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India’s power ministry has advised power generation firms and transmission companies to levy the late payment surcharge on distribution companies at not more than 12% in view of the stress in the sector amid the Covid-19 pandemic.

The rate of late payment surcharge in many cases is up to 18% per annum and has adversely impacted discoms during lockdown.

The measure aims at easing the financial burden on discoms and would also benefit consumers, a ministry statement said.

“In order to alleviate the financial stress in the power system , all generating companies and transmission companies have been advised by Ministry of Power to charge Late Payment Surcharge at a rate not exceeding 12% per annum (simple interest) for all payments made under the Liquidity Infusion Scheme of PFC and REC under Aatmanirbhar Bharat,” it said.

The pandemic has adversely affected the liquidity position of all stakeholders of the power sector especially discoms.

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

Also read: Over Rs 68,000 Crore Loans Released Under Discoms Liquidity Package

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

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

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