The Andhra Pradesh High Court has issued a stay order on the central government’s proceedings against Andhra Pradesh discoms for not providing letters of credit (LCs) to power generators. This comes after the central government recently directed the Andhra Pradesh government to immediately open the LCs for renewable energy producers having firm PPAs or lose access to the central pool of electricity and short-term power traded at the exchanges. The state power utilities are reportedly going through a serious financial crisis and struggling to raise loans to meet payment obligations. Given the government’s financial position and its stand on the PPAs, the State Bank of India has also raised doubts about the reliability of the state government’s guarantee to a Rs 30 billion loan recently sought by the Andhra Pradesh Power Finance Corporation. The loan amount, if sanctioned, is expected to be used by the power utilities for power purchase and for meeting other obligations.
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