It is early days yet, but the power ministry has made a good beginning by telling state electricity boards (SEBs) that they will not be supplied electricity—even by government-owned electricity producers—unless they produce a letter of credit (LC) for the value of the purchases. So, on the due date of payment, the SEB can either pay the power supplier and then rollover the LC, or refuse to pay, in which case, the suppliers asks the bank for its payment. Since no SEB is going to risk not getting supplies, this means, for electricity supplies since August 1, at least, there will be no delays in payment, much less a default.
The dues of around `77,000 crore till August 1, of course, will also need to be sorted out since, if power suppliers don’t get this money, they will be unable not just to run their businesses, but even to repay banks for loans taken; while `49,000 crore comprise dues to conventional power suppliers, dues to non-conventional energy suppliers are `9,600 crore,
