Nuclear Power Corporation seeks revised letter of credit from Tangedco 

Discoms have to offer a letter of credit to generation companies as a security mechanism

February 10, 2023 12:26 am | Updated 12:26 am IST - CHENNAI

The Nuclear Power Corporation of India Limited (NPCIL), which runs the Kudankulam Nuclear Power Plant (KKNPP), has sought a revision in terms and conditions of letter of credit from Tangedco.

As per the direction from the Centre, power distribution companies have to offer a letter of credit (LC) to the generation companies for their power purchases as a payment security mechanism. NPCIL has sought removal of conditional terms and an unconditional LC from Tangedco.

In a recent communication to the Southern Regional Power Committee (SRPC), NPCIL pointed out that Tangedco had said the revision was under consideration, but it had not received an unconditional LC so far.

As per the data shared by the company, as on January 6, 2023, the required value of LC from Tangedco is ₹322.51 crore and the available value is ₹312.29 crore, resulting in a shortfall of ₹10.22 crore.

NPCIL also sought payment of dues which are not covered under the Centre’s Late Payment Surcharge (LPS) and Related Matters Rules, 2022, which were notified on June 3, 2022.

The Rules enable distribution companies to clear their legacy dues as existing on June 3, 2022, in a time-bound manner in equated monthly instalments, and the late payment surcharge would not be levied. The rules also provide a framework for time-bound clearance of current dues through a payment security mechanism and disincentives like progressive withdrawal of open access if the provisions are not followed.

NPCIL said that at the end of December 31 last, Tangedco had dues of ₹2,556.6 crore exceeding 60 days. It also asked all distribution companies in the southern region to provide adequate LC to avoid action under the LPS Rules. It said the non-payment of dues was hampering its day-to-day activities, besides the working capital management, and it was unable to clear its liabilities in a timely manner.

Meanwhile, NLC Tamil Nadu Power Ltd. pointed out that Tangedco had been making payment in instalments under the liquidation plan, but requested an immediate payment of the current dues of ₹136 crore, which are over 45 days.

As per the data shared by Union Power Minister R.K. Singh in a written reply in the Lok Sabha, Tangedco had legacy dues of ₹14,752.71 crore and the current dues of ₹4,132.46 crore, excluding the disputed amounts and before the default trigger date.

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