Power Ministry Advises Gencos and Transcos To Charge Late Payment Surcharge At 12% Per Annum

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 Atmanirbhar Bharat. With this measure the financial burden on Discoms will ease out.

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 upto 18% per annum and has adversely impacted Discoms during this difficult phase of lockdown imposed on account of COVID-19 pandemic

COVID-19 pandemic has adversely affected the liquidity position of all stakeholders of power sector especially Distribution Companies. 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. One of the measures taken is with regard to Late Payment Surcharge (LPS), which becomes applicable in case of delayed payments by distribution companies to the generating companies and transmission licensees for power purchase/ transmission of electricity for the period up to 30.06.2020.  This will help consumers by maintaining smooth power supply and reduction in charges despite the difficult times.