State-run REC on Thursday said that it has sanctioned around ₹22,000 crore to Discoms in four States to clear their outstanding dues under the new late payment surcharge rules.

Late Payment Surcharge (LPS) are charges payable by a Discoms to a Genco or electricity trading licensee for power procured, or by a user of a transmission system to a transmission licensee on account of delay in payment of monthly charges.

“REC has provided a financial assistance of approximately ₹22,000 crore on August 3, 2022 for clearing the outstanding dues by the distribution licensees of Jharkhand, Rajasthan, Chhattisgarh and Jammu & Kashmir,” the navratna company said in a statement.

Major States such as Rajasthan, Jharkhand, Tamil Nadu, Maharashtra, J&K, Madhya Pradesh and Uttar Pradesh with pending power purchase dues to the tune of almost ₹96,000 crore are complying with the rules. In line with the same, the distribution licensees of the above States will be paying around ₹2,600 crore to their electricity suppliers on August 5, 2022, it added.

The NBFC, which focuses on power sector financing, said that as a step towards addressing the issue of mounting dues of State power utilities that has surpassed ₹1,50,000 crore, the Power Ministry has issued the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022.

The initiative works with the sole aim of financially strengthening the electricity suppliers and bringing financial discipline in the power sector. Furthermore, it will ensure that the end consumer not only gets reliable and quality uninterrupted supply of electricity, but additionally it alleviates the interest burden on account of late payment of power purchase dues by the state utilities, it added.

REC and PFC were advised by the Power Ministry to extend their support to discoms for timely payment of their dues under the new LPS rules. The scheme will help discoms save more than ₹19,800 crore.

These rules are applicable on outstanding dues of Gencos, inter-state transmission licensees, and electricity trading licensees (suppliers). It allows clearing of outstanding dues including late payment surcharge (LPS) by a Discoms may in a maximum 48 Equated Monthly Instalments (EMIs).

The Discoms shall specify within 30 days of the promulgation of these rules the amount of outstanding dues and number of installments in which they would be paid to the electricity suppliers. In case of delay in payment of an instalment, a LPS will be payable on the entire outstanding dues as on the date of notification of the rules. There will be no additional LPS payable on the outstanding dues if timely payment is made.