Surcharge rule prompts discoms to pay up, dues fall to Rs 93,000 cr

NEW DELHI: The total outstanding dues of electricity distribution utilities (discoms) has reduced by a third to around Rs 93,000 crore in May, less than a year after implementing the Late Payment Surcharge (LPS) Rules in June 2022.

The burgeoning dues of discoms toward power generation (gencos) mainly and transmission (trancos) firms have been affecting the entire value chain of the sector till last year.

According to industry data, in June last year, discoms’ dues were at Rs 1.39 lakh crore at the time of the launch of the LPS scheme. The total outstanding dues now stand at around Rs 93,000 crore as per the portal PRAAPTI (Payment Ratification And Analysis in Power Procurement for Bringing Transparency in Invoicing of Generators).

The portal was launched in May 2018, to bring transparency in power purchase transactions between generators and discoms.

Experts believe the strict implementation of the LPS Rules can make the power sector more viable.

The Rule ensures that the outstanding discom dues as well as the current dues are paid well on time.

The scheme has played a key role to bring financial discipline among discoms. The non-payment of current dues by discoms, one month after the due date of payment or two and half months after the presentation of the power bill, whichever is later, shall attract regulation (power supply cut) of power under the Late Payment Surcharge Rules, 2022.

Apart from this, the power ministry had also provided for strong payment security management and made it mandatory for discoms to open credit letters or make payment of power supply well in time to ensure financial discipline.

During the first wave of the pandemic, in May 2020, the government announced a Rs 90,000 crore liquidity infusion for discoms under which government-owned Power Finance Corporation (PFC) and REC Ltd were to give loans at economical rates in order to enable gencos afloat from the impact of the outbreak.

Later, the infusion package was raised to Rs 1.2 lakh crore and further to Rs 1.35 lakh crore.