Smaller penalty: Cut in late payment fee to save discoms Rs 6,000 crore annually

The Union power ministry’s proposal to reduce late payment surcharge for state-run power distribution companies could potentially provide a relief of about Rs 6,000 crore annually to these distressed entities, given their current level of over-dues to gencos, analysts said.

In the draft Electricity Late Payment Surcharge Rules, 2020, recently released by the ministry, it has proposed to reduce the rate of late payment surcharge from the existing 18%, to a graded payment linked to the “bank rate” which is 500 basis points (bps) more than SBI’s marginal cost of funds-based lending rate.

Discoms’ over-dues — payment default of 45-60 days or more — to power plants increased 52% annually to Rs 1.19 lakh crore at August end.

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