Govt cracks whip on discoms over payment delay

New Delhi: In an attempt to ensure timely payments by states to electricity generation utilities, the government has made it mandatory for state distribution companies (discoms) to offer letters of credit (LC) as part of the payment security mechanisms in power purchase agreements (PPAs).

Accordingly, the National Load Dispatch Centre (NLDC) and Regional Load Dispatch Centres (RLDC) have been directed by the Union power ministry to “dispatch power only after it is intimated by the generating company and distribution companies that a letter of credit for the desired quantum of power has been opened and copies made available to the concerned generating company.” The provisions kick in from 1 August.