Major boost for power generators: Payment security and coal cost pass-through


Major boost for power generators: Payment security and coal cost pass-through

Two latest developments on the policy and regulatory side have significantly boosted the prospects for power generating companies. This includes the centre’s directive mandating the opening and maintenance of adequate Letter of Credit (LC) as payment security mechanism by discoms under power purchase agreements (PPAs) beginning 1 August, 2019.

In another key development, the regulators have issued favourable orders in the recent past for thermal IPPs allowing pass-through of higher cost of imported coal in lieu of shortfall in supply from domestic linkage sources.

The LC mechanism is a major positive for power firms, according to Girishkumar Kadam, sector head & vice-president, ICRA Ratings. Read More

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