Centre set to move SC to ensure timely payments by discoms

The central government will move the Supreme Court to seek an early decision by the Andhra Pradesh high court on a power ministry direction to state distribution companies (discoms) to offer letters of credit (LC) for purchasing electricity, a top government official said. The move aims to help green energy developers receive their payments on time.

A generator can encash the LC 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 had also prevented them from procuring energy from exchanges and through the open access mechanism . Also, if the generator stops power supply due to lack of LCs, discoms will be liable to pay compensation to the generator as per the terms of the power purchase agreements (PPAs).

The Andhra Pradesh high court stayed the order, after the state government, through its discoms, challenged the order, which took effect on 1 August.

“We are filing a special leave petition (SLP) in the Supreme Court because we are not getting the decision in time from the high court of Andhra Pradesh,” Anand Kumar, secretary in the ministry of new and renewable energy said during the panel discussion.

The development comes amid tough times for the clean energy sector, with mounting dues to generators threatening to dent India’s image as a clean energy champion.

“There is very little that you can fault the MNRE or any of the central agencies with, but the challenge is with the state government. How do you ensure compliance with whatever the vision of the central government is?” said Neeraj Menon, partner, Trilegal, at the Mint conclave.

The Union government also plans to set up a new tribunal solely to enforce PPA.

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