Lok Sabha Question No. 1020 (UNSTARRED), answered on 2024-02-08
Subject: Late Payment Surcharge Rules
Ministry: POWER
Asked by: Gowdar Mallikarjunappa Siddeshwara, Rajeshbhai Naranbhai Chudasama

## GOVERNMENT OF INDIA MINISTRY OF POWER LOK SABHA UNSTARRED QUESTION NO.1020

## ANSWERED ON 08.02.2024

## LATE PAYMENT SURCHARGE RULES

1020. SHRI G.M. SIDDESHWAR: SHRI RAJESHBHAI CHUDASAMA:

Will the Minister of POWER be pleased to state:

- (a) whether the strict implementation of the Late Payment Surcharge (LPS) Rules would bring back financial viability of the power sector in the country and would attract investors to ensure reliable 24x7 electricity to consumers;
- (b) if so, the total outstanding dues of State Distribution  Companies (Discoms) before and after the implementation of LPS Rules; and
- (c) the details of the steps taken/being taken by the  Government  to strengthen the financial viability of the power sector?

## A N S W E R

## THE MINISTER OF POWER AND NEW & RENEWABLE ENERGY (SHRI R.K. SINGH)

- (a) & (b) : One  of  the  key  indicators  of  financial  distress  of  the  DISCOMs  is mounting power purchase dues towards the Generation Companies (GENCOs). With the implementation of Electricity (LPS and Related Matters) Rules, 2022, a remarkable  improvement  has  been  seen  in  recovery  of  outstanding  dues.  The total outstanding dues of States which were at Rs. 1,39,947 cr as on 03.06.2022, have reduced to Rs. 49,452 Cr. after timely payment of eighteen (18) monthly installments  as  on  31.01.2024.  Distribution  companies  are  also  paying  their current dues in time to avoid regulation of open access under the Rule.

This Rule has not only ensured that the outstanding dues are liquidated but has also ensured that the current dues are paid in time. It may be seen that the  Rule  has  played  a  vital  role  towards  ensuring  the  financial  discipline  in DISCOMs. This would facilitate investment in the sector necessary to sustain

24x7 electricity supply to consumers.

- (c) : Government  of  India  has  been  implementing  various  performance linked  and  result  oriented  schemes  with  the  objective  to  have  a  financially secure, viable and sustainable power sector (distribution segment in particular).  These  initiatives  have  been  designed  to  tackle  financial  and operational issues to bring in  desired  financial  discipline  in  DISCOMs   and State  Governments.

## Details of steps taken are:

- (i) Putting in place Rules to ensure timely payment for subsidy declared by State Government.
- (ii) Ensuring that the tariffs are up to date.
- (iii) Ensuring timely Energy Accounting and Energy Audit.
- (iv) Ensuring that the GENCOs are paid on time.
- (v) Putting  in  place  revised  Prudential  Norms  providing  that  no  DISCOM  or GENCO of a State Government will be able to get loans from PFC/ REC if the  DISCOM is making a loss, unless the DISCOM, with the approval of the  State  Government,  works  out  a  plan  for  loss  reduction  and  files  it with the Central  Government,  and  adheres  to  that loss reduction trajectory.
- (vi) Putting in place an incentive of an additional borrowing space of 0.5% of GDP if the DISCOM implements loss reduction measures.
- (vii)  Under DDUGJY, IPDS and SAUBHAGYA a total of 1.85 lakh Cr works were executed  and  2,927  new  sub-stations  have  been  added,  upgradation  of 3,965  existing  sub-stations  has  been  carried  out,  6,92,200  Distribution Transformers have been installed, Feeder separation of 1,13,938 Circuit Kilometer (Ckm) has been done and 8.35 Lakh Ckm of HT and LT lines have  been  added/  changed,  covered  wire  in  high  loss  areas  were provided,  works  like  Gas  insulated  substation,  underground  cabling, aerial bunched cable etc. were taken up.
- (viii)  Further,  the  Government  of  India  has  launched  Revamped  Distribution Sector  Scheme  (RDSS)  with  the  objective  of  improving  the  quality  and reliability of power supply to consumers through a financially sustainable and operationally efficient Distribution Sector. The Scheme has an outlay of Rs. 3,03,758 crore and a Gross Budgetary Support of Rs. 97,631 crore from Government of India over a period of five years from 2021-22 to FY 2025-26. So far infrastructure works amounting to Rs. 1.22 lakh crore and smart  metering  works  amounting  to  Rs.  1.30  lakh  crores  have  been sanctioned.  Infrastructure  works  sanctioned  mainly  includes  15.32  lakh Ckm new/to be upgraded HT & LT lines, 4.78 lakh new/ to be upgraded distribution  transformers,  1,110  new/  to  be  upgraded  substations  etc. Implementation  of these works  would  eventually contribute in the improvement of financial viability of Discoms which will benefit the end consumer.
- (ix) Providing that loss making DISCOMs will not be able to draw funds under any Power Sector Scheme of GoI unless they put in place measures for loss reduction.

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