REC sanctions Rs22,000 cr to clear Doscom dues under new LPS Rules

Rural Electrification Corporation (REC) has provided financial assistance of approximately Rs22,000 crore for clearing the outstanding dues by the distribution licensees of Jharkhand, Rajasthan, Chhattisgarh and Jammu & Kashmir.

The payments, made on 3 August 2022, pertain to the outstanding dues of generating companies, inter-state transmission licensees, and electricity trading licensees (suppliers). 
The union ministry of power has issued Electricity, (Late Payment Surcharge and Related Matters) Rules, 2022 (LPS Rules 2022), as a step towards addressing the issue of mounting dues of the state power utilities, which has now crossed Rs1,50,000 crore. 
The rules aim at 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. 
Ministry of power has advised both REC and PFC (both state-run financial institutions in the power sector) to extend financial support to Discoms for timely payment of their dues under the new LPS rules.
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 Rs96,000 crore are complying with the rules. In line with the same, the distribution licensees of these states will be paying around Rs2,600 crore to their electricity suppliers on 5 August 2022. 
As per the rules, the total outstanding dues including late payment surcharge by a distribution licensee may be cleared in a maximum of 48 equated monthly instalments (EMIs). The distribution licensee shall specify within thirty days of the promulgation of these rules the amount of outstanding dues and number of instalments in which they would be paid to the electricity suppliers. In case of delay in payment of an instalment, a late payment surcharge 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. Thus, timely payment of outstanding dues forms the core of the LPS rules.