PFC’s cumulative disbursements to state power distribution companies (discoms) under the Late Payment Surcharge (LPS) scheme have crossed Rs.33,000 crore, as of December 31, 2023.
Cumulative disbursements under LPS touched Rs.33,312 crore, according to Ms Parminder Chopra, CMD, PFC who also holds additional charge of Director (Finance).
Further from FY23 (April 1, 2022) till now, an amount of Rs.8 lakh crore has been billed to discoms. Out of this, less than 10 per cent is currently overdue, it is learnt.
To manage these dues, PFC is extending a revolving bill payment facility, with a period of up to one year, to discoms. Till December 31, 2023, PFC has cumulatively disbursed Rs.51,000 crore under this revolving scheme. Such funding is also expected to continue next year.
The LPS scheme, launched in June 2022, has so far seen a 60 per cent reduction in legacy dues of discoms, it is learnt.
LPS Rules: A background
The Union Ministry of Power through Gazette Notification dated June 3, 2022, notified “The Electricity (Late Payment Surcharge and Related Matters) Rules, 2022” (LPS Rules) and nominated Power Finance Corporation (PFC) as the nodal agency for implementation of LPS Rules. These rules provide a mechanism for settlement of outstanding dues of generating companies, inter-state transmission licensees and electricity trading licensees.
The rules provide for clubbing of all outstanding dues (as on June 3, 2022) including Principal, Late Payment Surcharge etc. into a consolidated amount which can be paid in interest free Equated Monthly Installments (EMI). The maximum number of such EMIs can be forty eight (48) based on the quantum of the total outstanding dues. The rules also indicate modalities for implementation and also penalties for not making payments, in line with the Re-determined Payment Schedule.
Further, non-payment of current dues by discoms, one month after the due date of payment or two and half months after the presentation of power bill, whichever is later, shall attract regulation of power as laid down in the LPS Rules, 2022.
It may be mentioned that as of June 3, 2022 (the date of implementation of LPS), legacy dues of discoms were Rs.1,20,540 crore. As of July 24, 2023, after the payment of 12 EMIs, these dues had dropped to Rs.61,025 crore.
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Note: This story is based on proceedings of an investor conference call of PFC held on February 8, 2024, discussing PFC’s performance during Q3FY24.
