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Wednesday, July 17, 2019
No power supply to discoms without bank guarantees
NEW DELHI: Power companies will mandatorily have to snap supplies to state electricity distribution companies that fail to open or maintain bank guarantees with effect from August 1, the Centre said in on order on Wednesday.Financially weaker distribution companies can open letters of credit for even one day, one week or a fortnight of electricity supply and keep renewing them, said the order issued by the power ministry.It seeks to curb addition to the outstanding bills of Rs 41,747 crore by discoms. Non-payment of dues by discoms is one of the key reasons for stress in the power sector.Discoms failing to provide letters of credit in favour of generators will not only be denied that much power but they will also be denied access to spot markets, possibly forcing affected states to resort to power cuts.The order comes after power utilities of southern states of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Telangana have expressed financial inability in opening guarantees and asked the Centre to defer implementation of the mechanism.Wednesday’s order is an extension of a previous order issued on June 28 under Section 28 of the Electricity Act, directing national, regional and state-level power transmitting agencies called ‘load despatch centres’ to schedule electricity from only those plants that have secured letters of credit from distribution companies against the supply.70269644 “In case of non-maintenance of adequate letter of credit or advance payment with respect to the generating station by the distribution company, the power supply from the generating station shall not be scheduled by the appropriate load despatch centre to the concerned distribution company,” the order said. The generators will get fixed costs.The order has asked power plants to intimate load despatch centres every morning about the status of bank guarantees. The centres will then issue a list of power plants that are not being scheduled due to nonpayment of letters of credit. Electricity despatch to a discom shall stop once the quantum of electricity under its letter of credit is supplied.
from Economic Times https://ift.tt/2JAZRky
from Economic Times https://ift.tt/2JAZRky
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