Late payment rule: Discoms’ overdues fall 74% in less than a year

The total overdues of power distribution companies (discoms) to power generation companies (gencos) have fallen 73.5% to Rs 26,516.57 crore in less than a year of the introduction of Late Payment Surcharge (LPS) rule on June 3, 2022.

The overdues (excluding disputed amounts and LPSC) were a little over Rs 1 trillion as on May 18, 2022, as per Praapti portal.

The significant reductionin overdues is the direct result of the strict financial discipline brought in by the central government in the functioning of discoms to protect the entire value chain.

The implementation of Electricity (LPS and Related Matters) Rules, 2022, with a provision to cut power supply to defaulting discoms, has improved the recovery of outstanding dues of suppliers – gencos, transmission companies and traders.

The discoms are also paying their current dues in time. As per PRAAPTI portal, discoms’ total outstanding dues to gencos as on May 21, 2023, is Rs 92,760 crore, which includes current dues of Rs 66,243 crore.

It may be noted that the discoms were also better placed financially to pay off the dues after the state governments disbursed more than 100% of the annual subsidy dues in FY22, as per the Power Finance Corporation’s (PFC’s) integrated rating report.