Power Ministry notifies new scheme for discoms to pay off dues

For the second time in two years, the Ministry of Power has notified a scheme for the power distribution companies (discoms) to defer their dues towards the power generating companies (gencos). With the dues of the discoms touching a record high of Rs 1 trillion, the ministry has offered a scheme to liquidate the dues of discoms. The proposed scheme would allow the discoms to pay their dues in 48 instalments, said the notification by the ministry. It has also proposed to deliver one-time relaxation to all the discoms wherein the amount outstanding, including principal amount and late payment surcharge (LPSC) on the notification date of the scheme, will be frozen LPSC will not be charged further. LPSC is imposed on the discoms when they do not pay their monthly dues in 90 days. All discoms' cumulative LPSC stands at Rs 6,839 crore. The liquidation of outstanding dues in a deferred way without the imposition of LPSC will provide discoms time to shore up their finances. At the same time, gencos will benefit from guaranteed monthly payments which otherwise were not coming to them, the ministry said. If the discoms delay the instalment payment, LPSC would be imposed on the total outstanding dues. Under the new scheme, the power ministry claims the discoms will save Rs 19,833 crore on LPSC in the next 12 to 48 months. The savings by discoms will eventually benefit the electricity consumption by lowering the burden of LPSC in the retail tariff. The measure is likely to provide timely liquidation of arrears to the gencos. At the same time, it is being ensured that discoms pay their dues to gencos regularly, otherwise, supply by gencos will be decreased, said the ministry. Dues of discoms to gencos are on a rise, at a time when the nation battles a coal and power shortage crisis.The dues to central government gencos, mainly NTPC Limited and NHPC Limited, among others, have seen a growth of 25%. According to the government data, Tamil Nadu is the biggest defaulter, with Rs 20,842 crore dues, followed by Maharashtra, with Rs 18,000 crore dues, and Uttar Pradesh with Rs 9,000 crore dues to gencos. Image Source Also read: Govt to launch revamped distribution scheme for power sector