REC elevates the power sector yet again; sanctions ₹22,000 crore under new LPS Rules
As a step towards addressing the issue of mounting dues of the State power utilities which has now crossed ₹1,50,000 crore, the Ministry of Power, Govt. of India has issued Electricity, (Late Payment Surcharge and Related Matters) Rules, 2022 (LPS Rules 2022). This initiative works with the sole aim of financially strengthening the electricity suppliers and bringing financial discipline in the power sector. Furthermore, it will ensure that the end consumer not only gets reliable and quality uninterrupted supply of electricity, but additionally it alleviates the interest burden on account of late payment of power purchase dues by the State utilities. REC and PFC (State run financial institutions in the power sector) were advised by the Ministry of Power to extend their support to Discoms for timely payment of their dues under the new LPS rules.
Major states such as Rajasthan, Jharkhand, Tamil Nadu, Maharashtra, J&K, Madhya Pradesh and Uttar Pradesh with pending power purchase dues to the tune of almost ₹96,000 crore are complying with the rules. In line with the same, the distribution licensees of the above states will be paying around ₹2,600 crore to their electricity suppliers on the 5th of August, 2022. REC has provided a financial assistance of approximately ₹22,000 crore on 3rd August 2022 for clearing the outstanding dues by the distribution licensees of Jharkhand, Rajasthan, Chhattisgarh and Jammu & Kashmir.
These rules will be applicable to outstanding dues of generating companies, inter-state transmission licensees, and electricity trading licensees (suppliers). As per the rules, the total outstanding dues including late payment surcharge by a distribution licensee may be cleared in a maximum of 48 Equated Monthly Instalments (EMIs). The distribution licensee shall specify within thirty days of the promulgation of these rules the amount of outstanding dues and number of instalments in which they would be paid to the electricity suppliers. In case of delay in payment of an instalment, a late payment surcharge will be payable on the entire outstanding dues as on the date of notification of the rules. There will be no additional LPS payable on the outstanding dues if timely payment is made. Thus, timely payment of outstanding dues forms the core of the LPS rules.