Prashant Jain, the joint MD & CEO of JSW Energy, spoke to CNBC-TV18 about the compulsory opening of letter of credit (LC) by the central government to ensure timely clearance of bills of power generating companies.
"We see the move by power ministry as long-term positive for the industry," Jain said on Tuesday.
Talking about the discoms, he said, “They (power ministry) have given one more window for the generator that during the period of default while using coal linkage coal the generator can continue supply power in the spot market or in the merchant market.”
“However, this is not going to resolve the problem overnight but over 6-12 month period because there will be discipline in this. Right now generators have no option but to continue to supply power to distribution companies,” he added.
According to him, "Generator will generally not encash LC for fear of cancellation of the power purchase agreement (PPA)."
On the business front, Jain said, “We are now looking for consolidation and there will be a couple of assets which we will be able to acquire if we get the right valuation.”
“Consolidation is going to be much faster because new RBI circular in place and because of February 12 circular there was uncertainty in power sector and resolutions were not taking place. However, I am seeing the tractions coming from lenders as well as some of the stressed companies to resolve the existing assets. So I am quite confident,” Jain added.