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    Power ministry working on scheme for discoms to pay off dues mainly towards gencos


    May 26, 2022 - Accord Fintech

     

      India, May 26 -- The power ministry is working on a scheme for electricity distribution utilities (discoms) to pay off their dues mainly towards generating company (genco), which has the potential to save Rs 19,833 crore on account of late payment surcharge. The inability of Discoms to pay dues impacts the entire value chain of the power sector. Considering this situation, the Ministry of Power 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 genco adversely affects the cash flow of the generating firm, which needs to make provisions for input supplies like coal, and for keeping adequate working capital for day-to-day operation of power plants. As per data available on the PRAAPTI portal, as on May 18, 2022, the discoms' overdues (excluding disputed amounts and Late Payment Surcharge (LPSC)) stood at Rs 1,00,018 crore. The LPSC dues were Rs 6,839 crore. The proposed scheme would enable 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 LPSC) on the date of notification of the scheme will be frozen without further imposition of LPSC. The discoms will be given flexibility to pay the outstanding amount in up to 48 instalments. The liquidation of outstanding dues in deferred manner without imposition of LPSC will give discoms time to shore up their finances. At the same time, 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 late payment surcharge shall be payable on the entire outstanding dues which otherwise was exempted. Published by HT Digital Content Services with permission from Accord Fintech. For any query with respect to this article or any other content requirement, please contact Editor at contentservices@htlive.com

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