Power Min reduces discom penalties to 5 per cent over SBI lending rate

The government has lowered the late payment fee chargeable by power and transmission developers from distribution companies by linking it to State Bank of India’s lending rate against the current 18 per cent.

The Electricity (Late Payment Surcharge) Rules 2021 exclude existing power plants and transmission systems whose tariffs have been determined through competitive bidding.

The rules bar electricity distribution companies with any outstanding bills after seven months from due date from procuring power from power exchanges or grant of short -term open access. The rules came into force on Monday when they were notified.

The gazette notification issued by the power ministry evoked mixed response from the industry as it supersedes regulations of the Central Electricity Regulatory Commission (CERC) and also the power purchase/transmission agreements. CERC chairperson P K Pujari had in October sent a statutory advice to the government against issuance of the rules citing jurisdictional overlap.

The power distribution companies welcomed reduction in late payment fee while electricity generation plants and transmission companies with regulated tariffs said lowering of the penalty rates interest would discourage timely payments by states. Data available on Praapti portal showed that the overdue amount payable by discoms to power plants at end of December 2020 stood at Rs 1,27,668 crore.

Industry officials said the government’s interference in the legally binding contracts between developers and distribution companies sets a wrong precedent

ET Energy World
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