MoP issues clarification on payment security mechanism for discoms

The MoP has clarified that discoms will continue to be obligated to pay for power within 45 days of the presentation of letter of credit (LoC). The clarification comes after misinterpretation of its earlier directive dated March 27, 2020 that relaxed norms for the payment security mechanism to help discoms battling non-payment issues from consumers in the nationwide lockdown. As per the MoP, discoms will need to either deposit or give LoC for 50 per cent of the cost of power that they want scheduled, and the remaining 50 per cent will have to be paid within the period given in the PPA, failing which LPS will apply. Further, the discoms’ obligation to pay for capacity charges and transmission charges as per the PPAs will remain.

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