Rs 90,000 cr package will reduce burden of DISCOMs, says Power Minister
May 16, 2020
New Delhi [India], May 16 : The Union Ministry of Power has written to all States and Union Territories, informing them about Rs 90,000 crore financial package to help the stressed DISCOMs.
The communication in this regard has been sent on May 14, the Ministry of Power in a statement on Saturday.
"The package for power sector will significantly reduce the burden of Discoms for maintaining the distribution of electricity as supplied by Gencos/Transcos during these difficult times," said RK Singh, Minister of State (Independent Charge) for Power.
The Central government had on May 13 decided to make an infusion of liquidity of Rs 90,000 crore through Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) as a part of the Atmanirbhar Bharat Abhiyan.
Under this intervention, REC and PFC would extend special long term transition loans up to 10 years to DISCOMs, the statement said.
The letter sent to States and Union Territories mentions that REC and PFC shall immediately extend loans to DISCOMs, which have headroom for further borrowing within the working capital limits prescribed under the UDAY.
Further, the DISCOMs that do not have headroom under the UDAY working capital limits but have receivables from the State government in the form of electricity dues and subsidy not disbursed will also be eligible for these loans to the extent of receivables from the State government, the statement adds.
Since these loans are long term and are not against the working capital requirement of the DISCOMs, with repayment security from the State government, the UDAY working capital limits will not be applicable, says the Ministry.
In addition, the respective States may request for relaxation of the limit to the Centre for the DISCOMs that do not have receivables from States or headroom available under the working capital limits imposed under UDAY.
The letter states that the COVID-19 pandemic and the resultant lockdown has adversely affected the power sector finances, creating a situation of acute liquidity crisis across the value chain in the power sector as a consequence.
In this situation, the liquidity infusion in the power sector value chain will help to tide over the cash flow problem. This money will help DISCOMs to repay most of the money that they owe to power generators (Gencos) and transmission companies (Transcos). It will help restart the virtuous cycle of cash flow in the power sector, the statement adds.
