The government makes broke power discoms accountable. It’s now time for tariff reforms.
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In the absence of support from states, discoms may be forced to go for a tariff hike or resort to load-shedding.
Synopsis
In order to reform the ailing power sector in India, the government has directed embattled distribution companies to maintain letters of credit to ensure timely payment to generation utilities. But it could mean a spike in debt and losses for discoms, disrupting power supplies. The time has come for a long-overdue tariff correction.
Surging losses and rising debt have dogged Indian power-distribution companies (discoms) over the past few years, impeding universal electrification. And the problems of the discoms may only worsen with the latest salvo from the Union power ministry. In an effort to shore up the financials of power-generation companies (gencos), the government has directed all discoms to open and maintain sufficient letters of credit (LC) as a payment-security
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