Some states will need relaxation of FRBM norms to avail the funds. “By and large, the finance ministry has been sensitised so they will allow FRBM relaxation whenever any state approaches them,” Union power minister RK Singh has recently told FE.
Sector-specific lenders PFC and REC are of the view that state-run power distribution companies (discoms) will not avail the full quantum of the Rs 90,000-crore loan that the government announced on Wednesday to inject liquidity in the electricity sector. “Since this loan is to be backed by state government guarantee, all the state discoms may not come forward for the loan,” REC told FE in response to queries on the topic. “Thus, the amount ultimately to be lent may be lower as states will also have to see as to how much state government guarantee they can extend,” REC added.
Some states will need relaxation of FRBM norms to avail the funds. “By and large, the finance ministry has been sensitised so they will allow FRBM relaxation whenever any state approaches them,” Union power minister RK Singh has recently told FE. Some states would also require the relaxation of one of the conditions under the Ujwal Discom Assurance Yojana (Uday) scheme, which allows discoms to borrow only up to 25% of their previous year’s revenue as working capital from banks and financial institutions.
Sources in PFC said for states which had headroom to borrow within the Uday working capital limits, the lenders can extend the loans immediately to the discoms. For those that have already breached the Uday borrowing parameter, discoms will be eligible for these loans only to the extent of the amount receivable to them from their respective state governments in the form of unpaid subsidies and dues (pending bills of civic bodies and other such institutions). Such government department dues to discoms currently stand at about Rs 54,000 crore across the country.
These loans would be used to clear the dues of discoms to the generators, which stood at Rs 87,374 crore at the end of March 2020, according to the government’s ‘Praapti’ portal. About 88% of these were “overdues” with payment default of 60 days or more. As in case of any other loans, REC and PFC will also have charge on the revenue account of discoms.