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The Ministry of Power on Wednesday said in a statement that it is working on a scheme to liquidate the past dues of Discoms as it owes Rs 1,00,018 crore as on May 18, 2022 to the generating companies.

The Discoms will be allowed to pay dues in 48 monthly instalments which will save around Rs 19,833 crore on late payment surcharge while states like Maharashtra and Tamil Nadu will save about Rs 4,500 crore each and the generating companies to benefit from assured monthly payments.

"The inability of Discoms to pay dues impacts the entire value chain of the power sector. Considering this situation, the Ministry of Power is working on a scheme to mitigate the financial woes of the Distribution Companies (Discoms) that are unable to pay their dues," it said.

The Ministry said that the delay of payments by Discoms to a generating company adversely affects the cash flow of a generating company, which needs to make provisions for input supplies such as coal, and for keeping adequate working capital for day-to-day operation of the power plant.

As per data available on PRAAPTI portal, as on May 18, 2022, the Discoms over dues (excluding disputed amounts and Late Payment Surcharge (LPSC)) were Rs 1,00,018 crore and the LPSC dues were Rs 6,839 crore. The proposed scheme enables payment of financial dues in easy instalments by the Discoms. A one-time relaxation is being considered to be given to all the Discoms wherein the amount outstanding (includes principal and LPSC) on the date of notification of the scheme will be frozen without further imposition of LPSC.

The Discoms will be given flexibility to pay the outstanding amount in up to 48 instalments.

The liquidation of outstanding dues in deferred manner without imposition of LPSC will give Discoms time to shore up their finances. At the same time, the generating company will benefit from assured monthly payments which otherwise were not forthcoming to them. However, in case of delay in payment of an instalment by a Discom, the Late Payment Surcharge shall be payable on the entire outstanding dues which otherwise was exempted.

As a result of the proposed scheme, the Discoms will save an amount of Rs 19,833 crore on LPSC in the next 12 to 48 months. States like Tamil Nadu and Maharashtra who have large outstanding dues will save over Rs 4,500 crore each as a result of this measure. Uttar Pradesh will save around Rs 2,500 crore while states like Andhra Pradesh, Jammu & Kashmir, Rajasthan and Telangana will save in the range of Rs 1,100 crore to Rs 1,700 crore.

The savings by Discoms will ultimately benefit the electricity consumer by reducing the burden of LPSC in the retail tariff. The measure is expected to provide timely liquidation of arrears which is very much more important to the Generating Companies than the amount foregone on LPSC. At the same time, suitable measures are being put in place to ensure that Discoms pay their dues to Gencos on a regular basis, otherwise supply by Gencos will be reduced.