In May, the government announced a Rs 90,000 crore liquidity infusion for discoms under which these utilities would get loans at economical rates from PFC and REC.
State-owned Power Finance Corporation has introduced a facility for electricity distribution companies (discoms) to avail funds for paying their dues to power generation companies (gencos), a move that will help in avoiding late payment charges as well as earn rebates for timely payments.
Mounting outstanding dues of discoms has been a perennial issue in the country.
The outstanding dues of discoms as of August stood at Rs 1.32 lakh crore compared to nearly Rs 97,000 crore in the same month last year, as per PRAAPTI (Payment Ratification And Analysis in Power procurement for bringing Transparency in Invoicing of generators) portal.
PFC’s credit facility would be available to discoms under the policy for offering Revolving Bill Payment Facility (RBPF) to discoms/ gedcos for ensuring early payment of dues to gencos/ transcos/ trading companies, an official told PTI.
Gedcos are those state utilities which are into generation as well as distribution of electricity. Transcos are into power transmission.
As per CERC regulations, a rebate of 1.5 per cent is extended on payment of power purchase dues up to 5 days of raising the invoice by genco/ transco, and thereafter, 1 per cent is extended for payment from 6th to 30th day.
Further, a LPSC (Late Payment Surcharge) at the rate of 1.5 per cent per month is charged in case the payment is delayed beyond 45 days.
The board of directors of PFC approved the policy at its 404th meeting held on September 14.
Under the policy, PFC Chairman and Managing Director is authorised to approve any modification/ relaxation/ deviation, issue any clarification/ interpretation and internal operating guidelines/ procedures, if required, for the purpose of giving effect to the provisions of the policy.
The policy was circulated earlier this week for implementation.
This is one the initiatives to reduce the stress on the power sector, especially on the cash-strapped discoms.
In May, the government announced a Rs 90,000 crore liquidity infusion for discoms under which these utilities would get loans at economical rates from PFC and REC. This was an initiative of the government to help gencos to remain afloat. Later, the liquidity infusion package was increased to Rs 1.2 lakh crore.
To provide relief to gencos, the Centre had enforced a payment security mechanism from August 1, 2019. Under this mechanism, discoms are required to open letters of credit with lenders for getting power supply.