Power for growth

The weak state of discoms is a big risk

The government wants to provide uninterrupted power to all households, which is an important precondition for attaining sustainable higher growth. While continuous power supply would require more capacity, the weaker links in attaining this goal are the electricity distribution companies (discoms), which, with their weak finances, are often not in a position to pay power producers in time. To address this issue, the power ministry last week made it mandatory for discoms to open and maintain adequate letters of credit under power purchase agreements. The idea is to ensure security of payment to power producers. In theory, this will force