CERC move to cut late payment charges will help avoid liquidity issues, say experts

Venkatesh Ganesh Mumbai | Updated on April 05, 2020

The Central Electricity Regulatory Commission’s (CERC) move to reduce late payment surcharge, in the wake of Covid-19 outbreak, will help discoms avoid liquidity issues.

A CERC order said that late payment surcharge (LPS) payable by discoms to gencos and transmission companies will be lowered to 1 per cent per month from 1.5 per cent during the lockdown period.

The move to not announce a moratorium has been welcomed, as this ensures payments to generation and transmission companies. “This will ensure smooth functioning of the entire power sector, and avoid liquidity issues at this important hour where grid security is of utmost importance,” said Pratik Agarwal, Managing Director, Sterlite Power.

Power transmission, generation companies and State governments had made representations asking for waiver of late payment surcharge, as a result of the force majeure situation and to tide over the liquidity crunch as a result of the coronavirus lockdown.

This move is also expected to help discoms . “The reduction in late payment surcharge will provide much needed relief to discoms,” said Agarwal. Also, the payment is to be done within 5 days of presenting of the bill. We are thankful to CERC for considering the financial sustainability of the entire power sector value chain, and bring out a balanced order during these trying times, Agarwal added.

On the ground, discoms are facing extremely low receipts due to non-payment or delayed payment by consumers. A continuous availability of electricity is paramount so as to not disrupt the public life as well as healthcare services, stated Harsh Shah, CEO, IndiGrid. “We wholeheartedly support the Ministry of Power’s decision of to keep the generation, transmission and distribution of electricity operational fully,” Shah added.

Sterlite Power is a global developer of power transmission infrastructure with projects of over 13,315 circuit kms and 23,885 MVA in India and Brazil.

Published on April 05, 2020

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