However, SECI has now been included in a new agreement and has improved its solvency from AA- to AA-by ICRA, which should give confidence to India`s solar developers, Bridge said to India. National Thermal Power Corporation`s (NTPC) Indian solar tenders have regularly introduced lower rates between INR0.2-0.5/kWh ($0.3-0.75) than SECI, in part because NTPC has benefited from this payment security agreement since 2002, unlike SECI. 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. Therefore, a payment security mechanism (in this case a tripartite agreement) can also be an effective mechanism to reduce additional risk premiums or to waive additional risk premiums that reduce the interest rates on loans for renewable energy projects. According to government documents verified by Mint, “SECI has already obtained the tripartite agreement to recover its taxes in the form of approximately 276 kronor of renewable energy from the funds that would be transferred to the Central State. 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.