MNRE issues clarification to MoP’s order on LC by discoms

The MNRE has issued a clarification to the MoP’s latest order that makes it mandatory for distribution companies to open and maintain adequate letters of credit (LC) as a payment security mechanism for gencos. The MNRE has stated that distribution companies would have to pay the agreed full tariff to renewable energy producers during the period of non-supply of electricity. Since there is no fuel cost for renewables, the fixed cost would be the agreed tariff during the non-supply period.

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