New Delhi: Consumers may get high electricity bill starting next month and/or have frequent load sheddings because the power ministry has ordered stopping supply to state electricity distribution companies (discoms) that don’t pay their bills on time. The Ministry of Power on June 28 directed all discoms to open and maintain sufficient letters of credit (LCs) as payment security under power purchase agreements (PPAs) with generation companies.
The rule comes into effect on August.
On the other hand, thermal power generators will have to pay in advance for coal procured from Coal India Ltd. They also need to make upfront payments to the Railways for coal transportation.
Meanwhile, credit ratings agency Crisil in a report said that said several discoms will struggle to get their LCs in order.
“Discoms have to provide LCs equivalent to their monthly power-purchase bills. This will be a herculean task for many discoms, given their precarious financial positions,” the report was quoted by a web portal.
The report further read that rise in interest burden of ₹400-500 crore for state utilities, particularly those in Uttar Pradesh, Karnataka, Tamil Nadu and Telangana.