Letters of credit for power supplies: UP seeks more time

Letters of credit for power supplies: UP seeks more time

The Uttar Pradesh Power Corporation and state distribution companies (discoms) have sought some time after a recent order from the power ministry made it mandatory for discoms and other utilities to provide letters of credit to the generation companies (gencos) as an assurance of payment in lieu of power supplies. The ministry’s move comes into effect on August 1.

The payment assurance can be given with either letters of credit (LCs) for power supplies or discoms need to pay in advance for the electricity they plan to purchase.

Senior officials in the energy department briefed chief minister Yogi Adityanath about the issue. According to a senior official who was privy to the discussion, while the state government is committed to help UPPCL in maintaining power supply, the chief minister has assured that he would request the central government to defer the date of implementation and also allow a phased rollout.

Citing Uttar Pradesh’s unique problem, the official said that post Uday transition, the financial position of the state discoms has not been satisfactory. Read More

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