Power Ministry Enables Discoms To Exit Purchase Agreements After 25 Years: Motilal Oswal
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Motilal Oswal Report
The Ministry of Power has issued a guideline enabling distribution companies to exit power purchase agreements on completion of 25 years.
Each state/Discom can take a call on relinquishment based on demand and supply. This in turn can pose a risk to some of NTPC Ltd.’s projects in the near term.
NTPC’s projects, which have currently completed 25 years, were signed in the form of a bulk power supply agreement.
Our interaction with the management suggests that Discoms cannot cherry-pick projects to let go and will have to relinquish other projects (with lower tariffs) covered under such an agreement.
We await further clarity on the implementation of the above guideline.
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