The Power Ministry has advised all power generating and transmission companies to charge Late Payment Surcharge (LPS) at a rate not exceeding 12 per cent per annum for all payments made under liquidity infusion scheme. The financial burden on Discoms will ease out with this measure.
In general, the applicable rate of Late Payment Surcharges is quite high despite the fact that interest rates in the country have softened over the last few years. The rate of LPS in many cases ranges upto 18 per cent per annum and has adversely impacted Discoms during lockdown phase due to COVID-19.
The pandemic has adversely affected the liquidity position of all stakeholders of the power sector especially Distribution Companies.
A number of measures have been taken by the Government to mitigate the adverse impact which include rebates on capacity charges, relaxing provisions of Letter of Credit for scheduling of power, and Liquidity Infusion Scheme.
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