State-owned NBFC REC Ltd on Thursday said it has sanctioned Rs 22,000 crore to power distribution companies (discoms) to clear their outstanding dues. The financial assistance has been provided to discoms of Jharkhand, Rajasthan, Chhattisgarh, and Jammu & Kashmir under the government's Late Payment Surcharge and Related Matters Rules 2022 (LPS rules).
The Ministry of Power had brought in electricity LPS rules 2022 to address mounting dues of the state power utilities, which have now crossed Rs 1,50,000 crore, REC Ltd, erstwhile Rural Electrification Corporation Limited, said in a statement. "Under new LPS Rules…REC has provided financial assistance of approximately Rs 22,000 crore on 3rd August 2022 for clearing the outstanding dues by the distribution licensees of Jharkhand, Rajasthan, Chhattisgarh, and Jammu & Kashmir," it said.
Major states — such as Rajasthan, Jharkhand, Tamil Nadu, Maharashtra, Madhya Pradesh, and Uttar Pradesh — with pending power purchase dues to the tune of almost Rs 96,000 crore are complying with the rules. In line with the same, the distribution licensees of the above states will be paying around Rs 2,600 crore to their electricity suppliers on August 5, 2022.
According to REC, the new rules will be applicable to outstanding dues of generating companies, inter-state transmission licensees, and electricity trading licensees (suppliers). 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 installments (EMIs).REC Ltd, under the Power Ministry, is a non-banking finance financial company (NBFC), focusing on power sector financing and development across India. It provides financial assistance to state electricity boards, state governments, central/state power utilities, independent power producers, rural electric cooperatives, and private sector utilities.