Deadline for finalising SEB debt recast norms may be extended: Power secretary

Written by feBureau | New Delhi | Updated: Apr 4 2013, 06:52am hrs
The government is likely to extend the deadline for finalising guidelines for the R1.9-lakh-crore debt recast plan for the ailing power distribution companies (discoms) to June 30. An inter-ministerial panel will meet on Friday and deliberate on the matter.

The secretaries from all the ministries are meeting on April 5. We will discuss whether to extend the deadline for the debt-recast plan, power secretary P Uma Shankar said on Wednesday.

Although eight states, including Uttar Pradesh, Rajasthan, Haryana, Punjab and Tamil Nadu, have expressed interest in tapping the R1.9-lakh-crore debt-restructuring lifeline thrown by the Centre to the state electricity boards (SEBs), only Rajasthan has submitted its proposal so far.

Moreover, the state governments are required to take over half of their SEBs debts, which is not easy, given that they also have to comply with their fiscal discipline targets.

According to the scheme approved by the CCEA, 50% of the short-term outstanding liabilities would be taken over by the state governments. The remaining 50% of loans would be restructured by providing moratorium on the principal and best possible terms for repayments. This would be converted into bonds to be issued by discoms to the lenders, duly packed by the state government's guarantee. The states will start feeling the pinch in 2013-14 when they start paying interest on the bonds. It is reckoned that the states will be able to afford the package.

The key difference between the Centre's package and the bilateral schemes entered into by the states is that the former involves sharing of the debt burden by the state governments as it is stipulated that they have to take over half of the outstanding short-term liabilities of discoms as of March 31, 2012.