Distribution companies (DISCOMs) owed power generators ₹273.93 billion (~$3.32 billion) in overdue payments for the monthly billing cycle at the end of December, according to Ministry of Power data.

The total outstanding amount owed to power generators is ₹719.58 billion (~$8.73 billion).

Despite massive unpaid dues, the recent trend for outstanding dues owed by DISCOMs has been downwards given that it was ₹1.13 trillion (~$13.9 billion) at the end of November, which itself was 17% lower than the June level.

The late payment surcharge (LPS) on dues has been a primary catalyst for DISCOMs to clear dues more promptly in the last six months.

DISCOMs are bound to pay LPS on the outstanding amount after the due date at the base rate of the late payment surcharge applicable for the first month of default.

The LPS rate for the successive months of default will increase by 0.5% for every month of delay, provided that the surcharge is not more than 3% higher than the base rate at any time.

Last June, the Ministry of Power notified the LPS rules 2022 to strengthen the regulatory provisions for the recovery of outstanding dues from DISCOMs.

Further, the current outstanding due amount, excluding the latest monthly dues, is ₹445.65 billion (~$5.41 billion).

The overdue before the trigger date is ₹273.48 billion (~$3.32 billion), after which the amount balloons to ₹448.9 million (~$5.45 million) as LPS becomes applicable on the amount.

The trigger date is one month after the due date of payment or two and a half months after the presentation of the bill by the generating company, whichever is later.

The DISCOMs were given the flexibility to pay the outstanding amount in up to 48 installments.

The Ministry of Power had launched ₹3.03 trillion (~$36.79 billion) reforms-based result-linked power distribution program to improve the operational efficiencies and financial sustainability of DISCOMs by providing financial assistance to modernize and strengthen distribution infrastructure.

The DISCOMs’ frail financial health and inability to pay dues on time have impeded the general growth of the renewable industry in the country over the years. The Minister for Power, R.K.Singh, implied that the state-owned DISCOMs are primarily responsible for the country’s lack of progress in meeting its rooftop solar installation targets for 2022.

Additionally, the DISCOMs’ inability to effectively promote and facilitate rooftop installations was recently brought to the fore in a letter written by the Ministry of New and Renewable Energy to all the states.