Late payment surcharge

Late payment surcharge

Subject: Economy

Section: Energy

Context:

The government is working on a scheme to liquidate the past dues of Discoms.

Outstanding dues:

According to data available on the PRAAPTI portal, as on May 18, 2022, the Discoms’ overdues (excluding disputed amounts and Late Payment Surcharge (LPSC)) stood at ₹1,00,018 crore and LPSC dues at ₹6,839 crore.

Details of the scheme:

• The Discoms will be allowed to pay off dues in up to 48 monthly installments,
• A onetime relaxation on the outstanding dues wherein the amount would be frozen without further imposition of LPSC.
• In case of delay in payment of an installment by a Discom, the LPSC shall be payable on the entire outstanding dues, which otherwise were exempted.

Concept:

Late payment surcharge refers to the charges payable by a distribution company (DISCOM) to a generating company or electricity trader for power procured, or by a user of a transmission system to a transmission licensee on account of delay in payment of monthly charges beyond the due date.

As per the ‘Late Payment Surcharge Rules, 2021’ the late payment surcharge will be payable on the outstanding payment after the due date at the base rate (pegged to SBI’s Marginal Cost of Lending Rate (MCLR)) of late payment surcharge for the first month of the default. The late payment surcharge rate for the successive months will increase by 0.5% for every month of delay. The surcharge should not be higher than 3% of the base rate at any time.

The rule will be applicable when the rate of late payment surcharge payable is not higher than the rate specified in the agreement for the purchase or transmission of power. Further, a DISCOM which has a late payment surcharge outstanding against a bill after the expiry of seven months from the due date will be debarred from procuring power from a power exchange or grant of short-term open access until such bill is paid.

PRAAPTI:

PRAAPTI (Payment Ratification And Analysis in Power Procurement for bringing Transparency in Invoicing of Generators),is a App and web portal developed to bring transparency in power purchase transactions between Generators and Discoms.

It was launched in 2018 by the Ministry of Power.

•  It will capture invoicing and payment data for various long term Power Purchasing Agreements (PPAs) from power generation companies (generators).
• It will help stakeholders in getting month-wise and legacy data on outstanding amounts of Discoms against power purchase.
• It will also allow users to know the details related to payments made by Discoms to power generators and when they were made.
• It will also enable consumers to evaluate financial performance of their Discoms in terms of payments being made to generators.
• It will also help DISCOMs and GENCOs to reconcile their outstanding payments.
• It will facilitate relative assessment of various State DISCOMs on ease of making payments to various generators and will also help make transactions in the power sector more transparent.