Government-owned Power Finance Corporation Ltd (PFC), India’s leading NBFC, has introduced a facility for electricity distribution companies (Discoms) to avail funds for paying their dues to power generation companies (Gencos).
This move will help in avoiding late payment charges for the Discoms, also will earn rebates for timely payments for them.
The newly introduced facility will address the issue of mounting outstanding dues of discoms.
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.
The credit facility offered by PFC 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, according to an official.
This is one of the initiatives undertaken to reduce the stress on the power sector, especially on the cash-strapped discoms.
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, an 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.
PFC’s board of directors approved the policy at its 34th Annual General Meeting.
In May 2020, the government announced 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.