Discoms get relief as Andhra HC stays Centre’s order

In a move that could undermine the Centre’s efforts to ensure payment discipline among state power distribution entities, the Andhra Pradesh High Court on Wednesday stayed the Union power ministry’s order making it mandatory for the state’s discoms to provide letters of credit (LCs) in favour of wind and solar power producers for purchase of power.

Though the court’s order is specific to the LCs with regard to the renewable units Andhra Pradesh buys power from and is in view of the fact the LC condition was waived by these units in the relevant power purchase agreement (PPA), it could be cited as a precedent by other states.

In its interim order, the court also stopped the power ministry from disallowing AP-based discoms to buy power through the open access system and on the power exchanges.