The central government plans to slash annual plan assistance to the states by up to 15 per cent to recover the states' huge dues to central power utilities, .
This was announced by power minister R Kumaramangalam in in the Rajya Sabha yesterday.
The minister also announced that state governments and electricity boards would have to open irrevocable letters of credits with corporations while sourcing power from central power utilities.
Kumaramangalam said the Centre is also trying to ensure that power is supplied only against irrevocable letters of credit.
He said the major defaulting states were Uttar Pradesh, Delhi, Jammu and Kashmir, West Bengal, Bihar and Orissa. He added that the power allocation formula followed by the Centre would not be reviewed.
The Gadgil Formula, now being used as the basis for power allocation by central power utilities, "is working satisfactorily and there is no proposal to revise it", he said.
