In a very encouraging development for renewable PPIs, the Solar Energy Corporation of India (SECI) was included as the beneficiary of a tripartite agreement between the Indian government, state governments and the Reserve Bank of India (RBI). The tripartite agreement serves as a payment guarantee mechanism for central government companies, which allows them to withhold funds from the Centre`s financial assistance to the States in the event of default by state-owned enterprises, including DISCOMs. The National Thermal Power Corporation (NTPC) has benefited from this agreement since 2002 and experience shows that the tripartite agreement is a strong deterrent against the failures of state-owned enterprises. Solar Energy Corporation of India (SECI) will benefit from a new agreement between the Indian government, state governments and the Reserve Bank of India (RBI). This agreement protects central government companies in the event of a late payment. Under the existing tripartite agreement, each state for royalties against electricity companies is at risk of deducting its central transfers of funds. Andhra Pradesh owes all electricity generators $20,000 in unpaid bills. In addition, the RBI has made its Certificate of Non-Objection (NOC) available to the TPP and the US Treasury agreement is expected. The agreement is important, given that the distribution company is the largest supplier of electricity to the states. „However, the energy sector continues to face challenges arising from weak demand from state-owned distribution companies (which does not involve a new long-term ODA or electricity supply contract), slow progress in resolving tariff offsets for affected thermal CPIs (independent electricity producers) and uncertainty about improving the availability of domestic gas““ , wrote the rating agency I Ltdcra in a report of 7 April. These agreements, first signed in the GJ02 and renewed for a decade in 2016, mean that the Reserve Bank of India (RBI) withdraws the amount of the failure of the respective government accounts to the Central Bank.
Payment security mechanisms have had a positive impact on improving the credit quality of renewable energy projects and on the security of payments from state nightclubs. In February 2017, SECI benefited from a tripartite agreement between the Indian government, state governments and the RBI. NTPC has been the beneficiary of such a tripartite agreement since 2002. ICRA (a rating agency) has increased SECI`s credit rating from AA- to AA- the tripartite agreement providing additional security against defaults by discomses.