Power ministry advises telcos to cap late payment surcharge at 12%

New Delhi: The government has asked power generating and transmission companies to cap late payment surcharge at 12 per cent per annum for all dues cleared under the Rs 90,000 crore liquidity infusion scheme of Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) under Atmanirbhar Bharat Abhiyan.

With this measure, the financial burden on discoms will ease out, said a statement issued by the Ministry of Power on Saturday. "It will also help consumers by maintaining smooth power supply and reduction in charges despite the difficult times," it added.

In general, the applicable rate of late payment surcharges is quite high despite the fact that interest rates have softened over the last few years.

The rate of late payment surcharge in many cases ranges up to 18 per cent per annum and has adversely impacted discoms during the difficult phase of lockdown imposed on account of Covid-19 pandemic.

Covid-19 pandemic has also affected liquidity position of all stakeholders in power sector, especially discoms. The government has taken several measures to mitigate the impact which include rebate on capacity charges, relaxing provisions of letter of credit for scheduling of power and liquidity infusion scheme.

One of the measures taken is with regard to late payment surcharge which becomes applicable in case of delayed payments by discoms to gencos and transmission licensees for power purchase or transmission of electricity for the period up to June 30.