Power lines run through a transformer at a Tata Power Delhi Distribution Ltd. facility in Delhi, India. (Photographer: Ruhani Kaur/Bloomberg)

Cabinet Decisions To Help Generation Companies, Says Power Secretary  

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.”

Watch the entire conversation here: