07/03/2020 Business Opportunities, Franchise
NEW DELHI: In an attempt to help green energy developers receive their payments, the union government plans to file a special leave petition (SLP) in the Supreme Court, requesting a timely decision from the High Court of Andhra Pradesh over the power ministry’ order of making it mandatory for state distribution companies (discoms) to offer letters of credit (LC) for buying electricity.
As part of the payment security mechanism, an LC can be encashed by an electricity supplier if a discom doesn’t clear its dues in time. Given the controversial attempt by the Y.S. Jagan Mohan Reddy-led state government to renegotiate clean energy tariffs with developers, the power ministry’ order also prevented them from procuring power from exchanges and through the open access mechanism.
Also, in the event of a stoppage of electricity supply due to non-opening of the LC by the discoms, they will be liable to pay compensation to the generator as per the terms of power purchase agreements (PPAs).
Andhra Pradesh government through its discoms appealed against this order that came into effect from 1 August, with the Andhra Pradesh High Court staying the order.
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