The union ministry of power has notified a scheme enabling power distribution firms (discoms) to defer their dues to power generating companies (gencos) for the second time in two years.The ministry has recommended a strategy to settle the discoms' dues, which have reached a record high of Rs 1 trillion.

According to the ministry's announcement, the proposed scheme would allow discoms to pay their dues in 48 instalments. It has also proposed giving all discoms a one-time reprieve in which the amount owing, including principal and late payment surcharge (LPSC), on the day of the scheme's notification will be frozen, and the LPSC will not be levied again.

When discoms fail to pay their monthly dues within the 90-day grace period, LPSC is imposed. All discoms' combined LPSC is at Rs 6,839 crore.

"The deferred liquidation of unpaid dues without the imposition of LPSC will give discoms time to strengthen their finances." "At the same time, gencos will benefit from assured monthly payments that might otherwise were not forthcoming to them," the ministry said in a statement.

However, LPSC will be charged on the whole outstanding dues if the discoms fail to pay the installment.

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