PGCIL Approves ₹10.75 Billion as Rebate to DISCOMs on ISTS Charges Amid COVID Crisis

PGCIL had received a letter from the Ministry of Power asking it to offer a rebate of 20-25% to DISCOMs


The Power Grid Corporation of India Limited (PGCIL) announced that it had approved ₹10.75 billion (~$142.5 million) as a one-time consolidated rebate to distribution companies (DISCOMs) and power departments of states and union territories.

The state-owned power transmission company had recently received a letter from the Ministry of Power to consider offering a rebate of 20-25% to DISCOMs on the interstate transmission (ISTS) charges levied by it. The rebate will be provided for passing on the benefit to the end consumer. The ministry had asked PGCIL to consider the rebate for the lockdown period on account of the coronavirus crisis.

Recently, the stimulus package announced by the government said that the DISCOMs would receive ₹900 billion (~$12.03 billion) to help them recover from the impact of COVID-19 pandemic. This one-time liquidity injection will be made available through the Power Finance Corporation (PFC) and REC Limited in two equal installments.

In an in-depth analysis, Mercom reported why such financial bailouts are not the best way to help the sinking DISCOMs.

The government has been trying to help the DISCOMs stay afloat in these testing times. The government recently announced a proposal to privatize DISCOMs in the union territories. The union territories include Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, Delhi, Jammu and Kashmir, Lakshadweep, Ladakh, and Puducherry.  While DISCOMs in the states come under the control of state governments, DISCOMs in the union territories are governed by the central government.

The government has initiated a few other measures to assist ailing distribution companies in these trying times. For instance, power generators (including renewables) in the country have been ordered to maintain an uninterrupted supply of power across states even if the distribution companies deposit Letters of Credit for 50% of the cost of power they want to be scheduled. For payments delayed beyond 45 days (from March 24, 2020, and June 30, 2020), the late payment surcharge has now been reduced to 12% per annum from the earlier 18%.

Mercom previously reported that DISCOMs owed renewable energy generators an amount of ₹68.37 billion (~$914.5 million) in outstanding payments spread across 307 pending invoices at the end of March 2020. according to data from the Ministry of Power’s payment ratification and analysis portal (PRAAPTI). This included dues of ₹311 million (~$4.2 million) under dispute.