Govt to ease borrowing cap in relief for discoms
THE ₹90,000 CR LOAN PACKAGE ANNOUNCED TO HELP DISCOMS WILL NOW COVER LOSSES TILL JUNE
NEWDELHI: The Union power ministry plans to request the cabinet to consider raising the borrowing limits of debt-laden state electricity distribution companies (discoms) so that they qualify for the ₹1.25 lakh crore reform-linked loan package, two people aware of the development said.
The circulated draft cabinet note seeks a one-time exemption for discoms from the conditions laid out for accessing working capital under the Ujwal DISCOM Assurance Yojana (UDAY).
The Union government had announced the liquidity injection into discoms as part of a stimulus package to revive
India’s virus-battered economy. The money is to be raised by state-owned Power Finance Corp. and Rural Electrification Corp. from the market against the receivables of discoms.
“The draft cabinet note has been circulated for inter-ministerial consultations,” said a senior government official, one of the two people cited above, requesting anonymity.
The ₹90,000 crore, 10-year loan package, announced to help discoms clear outstanding dues up to March 31, will now cover losses till June, with the package corpus now expected to reach ₹1.25 lakh crore. The Union power ministry is also examining the possibility of a reduction in interest rates for these loans.
Queries emailed to a power ministry spokesperson remained unanswered.
“This money will help discoms repay most of the money that they owe power generators and transmission companies. It will help restart the virtuous cycle of cash flow in the power sector,” the government said in a statement earlier.
The scheme involves loans to be disbursed in two tranches and is linked to certain reforms such as increasing digital payment interfaces, among others.