Payment security mechanism to induce discipline, but may stretch discoms: CRISIL

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.