State-owned power generating plants would not be covered under the new payment security mechanism which mandates offering a letter of credit by distribution companies to electricity generators, the Union Power Ministry said Wednesday.
The ministry issued the statement after some states sought clarification on the payment mechanism under the power purchase agreements approved by the Centre last month.
The payment security mechanism mandates that distribution companies would offer a letter of credit to generating firms as an assurance of payments for the supply of power.
The new system would be rolled out from August 1.
"The state-owned power generating stations are not covered under the order issued on June 28, 2019 and its subsequent amendments thereof. The bill payments of these state-owned power generating stations may be as decided by the respective state governments."