Power generators will benefit from the government's move allowing them to sell power through short-term pacts if they terminate agreement with a defaulting distribution company, according to a top government official.
Generation companies can, in the shorter term, pick up another power purchase agreement if a discom does not make payment, Ajay Kumar Bhalla, Power Secretary told BloombergQuint in an interaction. “That is a comfort....not that everybody is going to exercise it.”
Earlier, power producers couldn't use coal linkage for short-term pacts after terminating a pact because of a default. That made it impossible to operate the plant till a new buyer for electricity is found.
The cabinet last week announced measures aimed at easing the power sector stress. It included granting coal linkages for short-term power purchase agreements. The move, however, is unlikely to put additional pressure on Coal India Ltd., Bhalla said.
“They (Coal India) have a certain surplus production in some mines that face connectivity issues... It is being worked out,” Bhalla said. “I expect Coal India will stand up to this requirement.”
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