Ministry of Power clarifies that the reduced rate of late payment surcharge on electricity dues will be available only up to June 30, 2020

Apr 14, 2020 | by Avantis RegTech Legal Research Team


Industry Specific Compliance

The Ministry of Power on April 06, 2020, gives clarification that the reduced rate of late payment surcharge on electricity dues will be available only up to June 30, 2020 and from July 01, 2020, onwards the normal/penal rates of late payment surcharge will apply.

Whereas, there is mis interpretation regarding letter No. 23/22/2019-RR dated March 27, 2020 (Page 2) which specifies that the requirement of either making prepayment or giving Letter of Credit (LoC) for the entire cost of the power sought to be scheduled, that was put in place on June 20, 2019, was relaxed to the effect that during the period March 24, 2020 to June 30, 2020, the requirement of prepayment / giving LoC before power is scheduled shall be for 50% of the cost of power.

And Whereas, in continuation of the above mentioned Order, the Government have vide letter dated March 28, 2020 advised the CERC to reduce the rates of late payment surcharge applicable for the period March 24, 2020 to June 30, 2020. From July 01, 2020, the delayed payment surcharge will apply at the rate given in the PPA.

Therefore, in brief:

(a) The obligation to pay for power within 45 days of the presentation of the bill or as provided in the Power Purchase Agreements (PPA) remains unchanged.

(b) Late payment surcharge shall apply at reduced rate only for the period between March 24, 2020 to June 30, 2020 and afterwards the delayed payment surcharge shall be payable at rates given in the PPA/regulations.

(c) Obligation to pay for capacity charges as per the PPA shall continue, as does the obligation to pay for transmission charges

Therefore, it is clear that, the reduced rate of late payment surcharge on electricity dues will be available only up to June 30, 2020 and from July 01, 2020, onwards the normal/penal rates of late payment surcharge, as per PPA/regulations, will apply.

[Order No. 23/22/2019-R&R Part-4]


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