New Delhi: The power generating companies (gencos) may gain from new payment security mechanism but its compliance would hurt discoms, consumer and states, said CRISIL Research in a report.
The Union power ministry has made it mandatory for discoms to open and maintain sufficient letters of credit (LC) as a payment-security mechanism under power purchase agreements (PPAs) signed with generation companies (gencos or generators) from August 1, 2019.
“Genco gain spells discom discomfort. The LCs to induce discipline, but may stretch discom financials. The compliance with LC mechanism will hurt discoms, consumers and states,” the report said.
