“In general, the applicable rate of Late Payment Surcharges (LPS) 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,” the statement said.
COVID-19 pandemic has adversely affected the liquidity position of all stakeholders of power sector especially electricity 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,” it said.
The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved extending power sector liquidity infusion package to cover discom dues till June 30 and allowed a one-time relaxation in working capital lending limits by Power Finance Corp and REC to electricity distribution companies.
This means that the state power distribution companies will be able to avail more loans from PFC and REC to pay power bills till June this year. The one-time relaxation will enable states like Tamil Nadu, Odisha, Bihar and Jammu and Kashmir to avail about Rs 40,000 crore loans under the Centre’s liquidity injection package for power sector.
The liquidity infusion package was launched by the Centre under Atma Nirbhar Bharat scheme. The Cabinet had on May 13 approved the Rs 90,000 crore scheme allowing Power Finance Corp and REC to offer concessional loans to distribution utilities to clear dues of the distribution companies till March 31 this year.
The scheme has been extended following requests from various state governments citing rise in discom dues to Rs 1,20,000 crore at the end of June. Sources said PFC and REC have sanctioned Rs 68,000 crore loans to various discoms under the scheme. Of this about Rs 23,000 crore have been disbursed.