India's Appellate Tribunal for Electricity has ruled that power supplies can be rationed to state electricity boards that fail to provide letters of credit (L/Cs) to power generating companies.

The ruling overturns an earlier decision by the country's power regulator, the Central Electricity Regulatory Commission (CERC).

Surprise ruling

In 2007, the National Thermal Power Corporation (NTPC) asked permission from CERC to reduce power supply to the Jammu and Kashmir electricity board because it had failed to furnish a L/C as specified in its contract.

But CERC said last year that NTPC should look for other ways to seek payment from the electricity board.

Overturned

According to CERC, the opening of a L/C was no longer required as a "pre-emptive measure" against payment defaults.

On the basis of the latest decision by the Appellate Tribunal for Electricity, the NTPC can now seek to reduce or regulate supply of power to the Jammu and Kashmir electricity board because it failed to open a L/C in favour of NTPC.

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