Payment security mechanism for power generators can be a double-edge sword
The proposal will curtail profligate moves of state governments such as free/subsidized distribution of power
The mechanism can, however, crimp demand, at least till discoms get their act together
MUMBAI : The Union power ministry has made it mandatory for electricity-distribution licensees to open letters of credit as a payment-security mechanism under the power-purchase agreements. The move comes against the backdrop of mounting dues of power producers.
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