States to save Rs 19,833cr in power dues from amnesty scheme

NEW DELHI: State discoms ( power distribution companies) will save Rs 19,833 crore on late fee in the next 12 to 48 months from an surcharge-free instalment scheme being rolled out by the power ministry to help them clear their accumulated dues to gencos (generation companies), a major drag on the sector.

The savings from the scheme, first reported by TOI on May 18, will lead to reduced tariff burden for consumers as it will be passed on. The scheme is a one-time offer, the power ministry said on Wednesday. The scale of savings can be gauged from the fact that Maharashtra and Tamil Nadu, which have very large outstandings against gencos, will save Rs 4,500 crore each in surcharge payment.

Others such as Andhra Pradesh, Jammu & Kashmir, Rajasthan and Telangana are estimated to save between Rs 1,100 crore and Rs 1,700 crore. Late fee, called late payment surcharge in industry parlance, is charged by gencos on the outstanding amount of a discom. It is levied at the base rate, pegged to SBI’s Marginal Cost of Lending Rate (MCLR).

The surcharge is charged at base rate for the period of delay in the first month and raised by 0.5% for every successive month of delay, subject to a maximum of 3% over base rate at any time. Delayed payments, thus, end up raising the burden on discoms and stretch the finances of gencos, impairing their ability to maintain fuel inventories to meet higher demand. As of May 18, the combined dues of discoms, excluding disputed amounts and surcharge, stood at more than Rs 1 lakh crore.

Surcharge dues stood at Rs 6,839 crore, data available on the ministry’s portal on discoms dues show. Under the scheme, the outstanding amount, including principal and surcharge, will be frozen without imposition of surcharge on the date the scheme is notified. The discoms can then choose a tenure of 12 and 48 months for the instalments. Discoms will have to clear their current bills on time and keep payments up to date.