*Rs 22,000 crores sanctioned under new LPS Rules
Nishikant Khajuria
JAMMU, Aug 4: Under new LPS Rules, State owned Non-Banking Finance Company (NBFC) REC Ltd has sanctioned Rs 22,000 crores to power distribution companies (Discoms) of Jammu Kashmir Union Territory and three other States to clear their dues.
This significant financial assistance was provided yesterday for clearing the outstanding dues by the distribution licensees, which will be paying to their electricity suppliers.
The total outstanding dues owned by electricity Distribution Companies (Discoms) in Jammu Kashmir to power producers is above Rs 9600 crores while the total overdue amount of power utilities in the country has now crossed Rs 1,50,00 crores.
Besides Jammu Kashmir, financial assistance has been provided to Discoms of Jharkhand, Rajasthan and Chhattisgarh under the Government’s Late Payment Surcharge and related matter Rules 2022 (LPS Rules).
Pertinent to mention that as a step towards addressing the issue of mounting dues of the State power utilities, the Union Ministry of Power had 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 brining financial discipline in the power sector to 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.
Hence, 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.
The overdue amount (excluding disputed) of the Union Territory of J&K for the consumption of electricity as in July 2022 had gone up to Rs 9642.15 crores. Among all the Power Generation Companies, the highest overdue amount of Rs 3859 crores pertained to National Thermal Power Corporation (NTPC), followed by National Hydroelectric Power Corporation whose overdue amount had gone up to Rs 1268.50 crores.
According to the sources, J&K Power Distribution Companies owed an amount of Rs 416.59 crores to Aravali Power Company Pvt Ltd, Rs 55 lakhs to Bhakhra Beas Management Board, Rs 402.84 crores to Meja Urja Nigam Pvt Ltd, Rs 610 crores to SJV Nigam Ltd, Rs 364.89 crores to THDC India Ltd, Rs 729 crores to NPCIL-Rajasthan Atomic Power Station, Rs 226.98 crores to NPCIL-Narora Atomic Power Station, Rs 27.65 crores to NPCIL-Tarapur Atomic Power Station, Rs 5.45 crore to NPCIL-Kakrapar Atomic Power Station and Rs 9.27 crores to Khari Hydro Power Project Pvt Ltd (IPP). Besides this, the J&K UT Power Distribution Companies have outstanding dues amounting to Rs 1720.47 crores of all the transmission companies as on ending June 2022.
Power producers give 45 days to Discoms to clear bills for electricity supply. After that, outstanding dues become overdue and generators charge penal interest on that in most cases. To give relief to Gencos, the Centre had enforced a payment security mechanism from August 1, 2019. Under this mechanism, Discoms were required to open letters of credit for getting power supply. The Centre had also given some breathers to Discoms for paying dues to Gencos in view of the COVID-19-induced lockdown. The Government had also waived penal charges for the late payment of dues.
In May 2020, the Government had announced a Rs 90,000-crore liquidity infusion for Discoms under which these utilities got loans at economical rates from Power Finance Corporation (PFC) and REC Ltd. Later, the liquidity infusion package was increased to Rs 1.2 lakh crore and further to Rs 1.35 lakh crore.
As per the new LPS Rules, the total outstanding dues, including late payment surcharge by a distribution licensee may be cleared in a maximum of 48 equated monthly installments (EMIs). There will be no additional LPS payable on the outstanding dues if timely payment is made.
Jammu Kashmir along with Rajasthan, Jharkhand, Tamil Nadu, Maharashtra, Madhya Pradesh and Uttar Pradesh with pending power purchase dues to the tune of almost Rs 96,000 crore are complying with the rules. In line with the same, the distribution licensees of J&K and these States will be paying around Rs 2,600 crore to their electricity suppliers on the 5th of August, 2022.
REC provided a financial assistance of approximately Rs 22,000 crore on 3rd August 2022 for clearing the outstanding dues by the distribution licensees of Jammu Kashmir, Jharkhand, Rajasthan and Chhattisgarh.
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