Discoms start offering letter of credit for power purchases as payment security
State government controlled power distribution companies (Discoms) have started offering letters of credit (LC) for power purchases as a payment security after the Centre mandated them to do so from August 1.
Officials in the know said that Minister of State (Independent Charge) for Power and New and Renewable Energy RK Singh reviewed the situation and all State and Union Territory governments had agreed to implement the Centre’s order.
The Discoms are said to have been offering LCs for power purchases spanning from a week to a month in advance. These LCs will be invoked if the Discom defaults in payments to the power generation company (Genco) beyond the 45-day or 60-day grace period for clearing dues, as provided in the power purchase agreement (PPA).
