The power ministry has advised power generation firms and transmission companies to levy the late payment surcharge on discoms at not more than 12 per cent in view of the stress in the sector amid the COVID-19 pandemic.

The rate of late payment surcharge (LPS) in many cases is up to 18 per cent per annum and has adversely impacted discoms during the lockdown. The measure aims at easing the financial burden on discoms (power distribution utilities), and would also benefit consumers, a ministry statement said.

“In order to alleviate the financial stress in the power system, all generating companies and transmission companies have been advised by Ministry of Power to charge Late Payment Surcharge at a rate not exceeding 12 per cent per annum (simple interest) for all payments made under the Liquidity Infusion Scheme of PFC and REC under Aatmanirbhar Bharat,” it said. In general, the applicable rate of LPS is quite high despite the fact that interest rates in the country have softened over the last few years.