No payment relief for discoms from July: Power ministry

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Published: April 7, 2020 3:05 AM

The Central Electricity Regulatory Commission (CERC), at power ministry’s behest, has reduced the late payment surcharge for the aforementioned period from the usual rate of 1.5% to 1%.

“Efforts are also being made to infuse some liquidity in the power sector, the details of which would be shared with discoms shortly,” the ministry said.“Efforts are also being made to infuse some liquidity in the power sector, the details of which would be shared with discoms shortly,” the ministry said.

Clearing doubts over the duration of the payment reliefs given to power distribution companies (discoms), the Union power ministry explained on Monday that the low late payment penalties would apply only on bills that have to be settled between March 23 and June 30.

The Central Electricity Regulatory Commission (CERC), at power ministry’s behest, has reduced the late payment surcharge for the aforementioned period from the usual rate of 1.5% to 1%.

The step was taken to provide some relief to the discoms which are finding it difficult to continue meter reading exercises and collect payments from consumers amid the country-wide lockdown to contain the outbreak of the coronavirus.

“Efforts are also being made to infuse some liquidity in the power sector, the details of which would be shared with discoms shortly,” the ministry said. “However, discoms may also raise funds, if required, to meet this crisis”.

The ministry also clarified that though discoms can furnish a lower quantum of advance payment as security till June 30, “the obligation to pay for the power within 45 days of the presentation of bill (or the period given in the PPA) remains the same”.

The Union power ministry had implemented the letter of credit (LC) mechanism since August 2019, which made it mandatory for discoms to issue advance LCs worth the total value of power to be supplied. For now, the LCs can be 50% of the worth of electricity.

As FE reported earlier, discoms of Uttar Pradesh, Madhya Pradesh, Andhra Pradesh and Punjab have invoked the force majeure clause in their power purchase agreements (PPAs), claiming that the lockdown is preventing them to “perform obligations” under the contracts.

A force majeure means extraordinary events or circumstances beyond human control. The ministry of new and renewable energy (MNRE) has already clarified that discoms should make payments to renewable energy generators “on a regular basis as was being done prior to the lockdown”.

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