The government has asked power generating and transmission companies to cap late payment surcharge at 12 per cent per annum for all dues cleared under the Rs 90,000-crore liquidity infusion scheme of Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) under its Atmanirbhar Bharat initiative. This measure will ease the financial burden on distribution companies, the Ministry of Power said in a statement on Saturday.
“It will also help consumers by maintaining smooth power supply and reduction in charges despite the difficult times,” it added.
In general, the applicable rate of late payment surcharges is quite high despite the fact that interest rates have softened over the last few years.
The rate of late payment surcharge in many cases ranges up to 18 per cent per annum, and has adversely impacted distribution companies during the difficult phase of lockdown imposed on account of the coronavirus pandemic.
COVID-19 has also affected liquidity position of all stakeholders in power sector, especially distribution companies.
The government has taken several measures to mitigate the impact which include rebate on capacity charges, relaxing provisions of letter of credit for scheduling of power and liquidity infusion scheme.