MoP working on a scheme to liquidate the past dues of discoms

The Ministry of Power (MoP) is working on a scheme to mitigate the financial woes of the distribution companies (discoms) that are unable to pay their dues.

Delay of payments by a discom to a generating company adversely affects the cash flow of a genco, which needs to make provisions for input supplies such as coal, and for keeping adequate working capital for day-to-day operation of the power plant. As per data available on PRAAPTI portal, as on May 18, 2022, the discoms over dues were Rs 1,000.18 billion and the late payment surcharge (LPS) dues were Rs 68.39 billion. The proposed scheme enables payment of financial dues in easy instalments by the discoms. A one-time relaxation is being considered to be given to all the discoms wherein the amount outstanding (includes principal and LPS) on the date of notification of the scheme will be frozen without further imposition of LPS. The discoms will be given flexibility to pay the outstanding amount in upto 48 instalments. The generating company will benefit from assured monthly payments which otherwise were not forthcoming to them. However, in case of delay in payment of an instalment by a discom, the LPSwill be payable on the entire outstanding dues which otherwise was exempted. As a result of the proposed scheme, the discoms will save an amount of Rs 198.33 billion on LPS in the next 12 to 48 months.The savings by discoms will ultimately benefit the electricity consumer by reducing the burden of LPS in the retail tariff.

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