Coal India decides to ease payment terms for distressed power cos

Coal IndiaNSE -1.22 % has decided to ease payment terms for its customers, particularly for those in the stressed power sector, and be lenient in dealing with defaults. It will also accept ‘usance’ letters of credit, a Coal India executive said. “This is also referred to as deferred payment letters of credit, which will allow consumers in the power sector to get deferred payment option for coal value by paying service charge to its banker. The banker makes instant payment to Coal India,” said a senior Coal India executive.

“It is for power consumers with valid fuel supply agreements, and the tenure of the credit will depend on the bargaining power of the generator with the bank and can range from a month to three months.” He said power customers sought a three month payment moratorium but this is not possible as dues from the sector are already at Rs 13,000 crore.