In an important decision taken by the Uttar Pradesh Cabinet on Thursday, it was agreed upon that the state would stand government guarantee towards issuance of bonds and bank loans taken by power distribution companies (discoms) under their financial restructuring programme (FRP) approved by the Centre.
?Bonds worth R15,840 crore would be issued by the state government against loans taken from the 20-bank consortium and we hope to pitch them at a coupon rate of 8.45-9%,? said a senior official of the state government, adding that bonds will be issued in about a month’s time. ?We are waiting for an opportune time to start the process as government securities rates are very high at present. We hope that they will come down to about 9% in about a fortnight’s time,? he said.
It may be mentioned that the central government has approved the SEB restructuring scheme worth around R1.9 lakh crore for some sick SEBs and about 70% of the losses are estimated to have been contributed by SEBs in six states ? Rajasthan, Tamil Nadu, UP, Haryana, Punjab and MP.
The restructuring plan envisages that 50% of the SEB?s short-term liabilities are rescheduled by the lenders and serviced by the discom with a moratorium of three years on principal repayment. That means the SEB will continue to service the interest part. The remaining liabilities of R15,840 crore are to be taken over by the state governments and converted into bonds guaranteed by them.