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Govt bars defaulting discoms from short-term power purchases in open market

Letter of Credit to be mandatorily used as payment security mechanism for long-term PPAs signed by loss-making discoms



Shreya Jai New Delhi
The Centre in a bold move to discipline the state-owned loss making power distribution companies (discoms) announced that the ‘Letter of Credit’ should be mandatorily followed as a payment security mechanism. At the same time, it also said the discoms which default on their payment to power generators (gencos) under any long-term agreement should not be allowed to purchase short-term power from open market.

In a public statement, the ministry of power said R K Singh, minister of state for Power and New & Renewable Energy and Skill Development & Entrepreneurship has approved the proposal to make it mandatory for discoms
Topics : Discoms

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First Published: Jun 28 2019 | 7:29 PM IST

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