HYDERABAD: The State government will come to the rescue of the Discoms in case they require any additional financial assistance to give Letters of Credit (LCs) to banks for purchase of power from August 1. There will be no problem in providing 24X7 power supply, top officials in the State government confirmed this to Express on Tuesday.
The Ministry of Power issued an order that the Discoms should give LCs to bankers while making power-purchase agreements. According to sources, the Discoms have to submit LCs to banks while purchasing power from Central Generating Stations (CGS) and IPPs like solar, wind and other private power generating stations. The LCs will not come into the picture when Discoms are taking power from State Generating Stations, sources said.
As the Discoms require money for giving the LCs, they requested the State government to give Rs 1,000 crore additional funds. According to sources, the file was circulated to the Finance Department. “The Discoms are independent entities. They can manage the LC issue with their own resources. If there is any crisis, the government is always there to rescue them,” a top government official said.
The sources said that there was a provision in the Budget to reimburse power subsidies to the Discoms. “The government has been releasing the subsidy amounts as mentioned in the budget on a regular basis,” the sources said, indicating that the Discoms had money with them.
Budgetary allocations
If the Ministry of Power wanted the Discoms to implement its orders of submitting of LCs, then the State government would think of making more allocations in the Budget. “The full Budget of the State will be presented in August/September. Then, the government will discuss the issue and include the additional amount required for the Discoms in the Budget,” top officials said.
The officials averred that there would not be any problem to provide 24x7 power supply in the State, due to the LC system. There will be no power cuts in future too. Asked whether the Discoms are able to manage the matters properly, as they are currently in debt, the official sources said: “It is true that the Discoms are in debts. But, the loans are raised to develop the infrastructure to give quality power to citizens. There is no bungling with the debt. The debts are spent to augment the system. If the Discoms are unable to pay the LCs to purchase the power, the government, anyway, will support them financially.”