Responding to the long-standing demand of independent power companies, power minister RK Singh on Friday approved implementation of the payment security mechanism. With the new order, it would be mandatory for distribution companies (discoms) to open and maintain adequate letter of credit (LC) as payment security to private power plants. The order would be applicable from August 1.
Discoms’ dues to power producers stood at Rs 35,845 crore at the end of April, up 30% from a year earlier, and 58% of these were “over-dues” with payment default of 60 days or more.
