About a month after the government approved the implementation of the payment security mechanism, the Union ministry on Wednesday, allowed distribution companies (discoms) to receive power even if they provide advance guarantee for “at-least one day’s purchases of electricity”.
Power minister RK Singh, on June 28, had made it mandatory for discoms to open and maintain adequate letter of credit (LC) as payment security to private power plants. The relaxation comes after sector experts cautioned that the move could push financially weak discoms to report lower than actual power demand or resort to load-shedding.
Discoms, which are not in their best health, would have to create LC for about Rs 30,000 crore before August 2019, if the circular has to be implemented, India Ratings had estimated.
