The Ministry of Power has proposed amendments to the Late Payment Surcharge Rules, 2021. One of the proposed amendments (Para 6) proposes that:

  • If any payment is delayed for more than seven months, generating companies can sell contracted power to other consumers till payments are cleared.
  • This is provided that DISCOMs are given a notice of 15 days.
  • During this period, the DISCOMs have to continue to pay fixed charges to the generator.

It is our suggestion that the proposed Rule 6 be deleted from the final rules. This is because it is unfair to the procurers and infringes upon the sanctity of the contract signed between the two parties. Further, a similar clause to ensure continued payment of fixed charges already exists in case LC is not maintained.

Implementation of Rule 6 could reduce faith that DISCOMs have in the processes for power contracting. This could lead to increased litigation, place undue burden on DISCOM finances, increase consumer tariffs, raise risk of load shedding and contribute to increase in state-owned capacity addition which could affect private investment in the sector. Some of the issues with implementation of Rule 6 are detailed in our submission