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ARTICLE · 25 JANUARY 2021

Infrastructure And Energy Digest – Energy (August 2020)

Economic Laws Practice
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By way of a press release dated August 22, 2020, the Ministry of Power (MoP) noted that the rate of Late Payment Surcharge (LPS) is quite high and in many cases is up to 18% per annum.

IndiaGovernment, Public Sector
Economic Laws Practice
Economic Laws Practice
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Late Payment Surcharge for Gencos and Trancos

Background:

  • By way of a press release dated August 22, 2020, the Ministry of Power (MoP) noted that the rate of Late Payment Surcharge (LPS) is quite high and in many cases is up to 18% per annum. this has adversely impacted DISCOMs during the lockdown.
  • The MoP has therefore advised generating companies and transmission companies to levy the LPS at a rate not exceeding 12% per annum (simple interest) for all payments made under the Liquidity Infusion Scheme of Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) under Atmanirbhar Bharat.

Our view: The COVID-19 pandemic has adversely affected liquidity of all stakeholders of the power sector, especially DISCOMs. The aforesaid announcement by the MoP will help alleviate the financial stress in the power sector. Further, all measures taken to ease the financial stress would also eventually benefit the consumers by way of smooth power

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