Power distribution utilities will have to either offer a Letter of Credit for power supplies or pay in advance to power generation companies, according to guidelines issued by the Ministry of Power.
On June 28, the Ministry of Power made it mandatory for power distribution companies (Discoms) to provide a payment assurance to power generation companies (Gencos) before procuring electricity through a Load Dispatch Centre (LDC).
“The Letters of Credits (LOCs) are issued by the banks and financial institutions. For a LoC, you have to deposit a certain margin that will be given by the Discoms. That is an essential requirement from August 1,” Minister of State (Independent Charge) for Power and New and Renewable Energy, RK Singh said.
