Covering dues: Special loans for discoms raised to Rs 1.2 lakh crore

The Centre had announced the scheme to clear the dues owed by discoms to the power generating companies till March, but several states, citing the discoms’ additional stress due to the coronavirus lockdown, wanted a widening of the window, Union power ministry secretary Sanjiv Nandan Sahai said.

The loans being offered to state-run electricity distribution companies (discoms) under a special liquidity window may be increased to Rs 1.20 lakh crore from the Rs 90,000 crore announced earlier to cover the additional dues of these entities to power generators for the April-June period, a senior official said on Sunday.

The Centre had announced the scheme to clear the dues owed by discoms to the power generating companies till March, but several states, citing the discoms’ additional stress due to the coronavirus lockdown, wanted a widening of the window, Union power ministry secretary Sanjiv Nandan Sahai said.

“As on September 11, Rs 25,000 crore has been disbursed out of Rs 68,000 crore sanctioned under the scheme,” Sahai added while addressing the webinar on renewable energy organised by PHD Chamber of Commerce and Industry. The special loans are being given by state-run PFC-REC.

Overdues — receivables pending for more than 60 days — to gencos by discoms stood at `1.16 lakh crore on June-end. By July-end, the figure had increased by another Rs 1,000 crore.

To allow all discoms to avail loans under the liquidity infusion scheme, the Cabinet had recently relaxed their borrowing limit restrictions set by the Ujwal Discom Assurance Yojana (Uday), enabling Tamil Nadu and Bihar to borrow under the scheme. These states had sought loans of Rs 20,622 crore and Rs 3,524 crore, respectively.

Additionally, as Union power minister RK Singh recently told FE, the late payment surcharge rates on delayed payments have been reduced to 12% from about 18%. “This would provide relief to the discoms as it would effectively cover more pending dues, as the outstanding amounts to discoms will now be recalculated according to the lower 12% rate,” Singh said.

Funding to discoms under the Atmanirbhar bharat package would be done in two tranches, both special long-term transition loans of tenures up to 10 years. The release of the first component of the loan to each state discom will be contingent on the respective state governments undertaking to clear the departmental dues to their discoms, and putting in place a credible mechanism to release the consumer subsidies in advance. To receive the second tranche of the package, the discoms will have to furnish evidence of actions taken to implement the initial undertakings, which will include enabling digital payment of electricity bills.

Sending a stern message to discoms that refuse to mend their ways and be on a commercially viable path despite several bailout packages, the power ministry has recently told PFC-REC that they need not extend any new credit line to the discoms, after the exhaustion of the liquidity window, only if the latter don’t self-correct. “PFC-REC lending norms have been tightened and the prudential norms have been updated to correspond to the best followed by any financial institution,” Union power minister RK Singh told FE. “Any further loan request, apart from the liquidity infusion scheme will be evaluated according to the revised prudential norms,” Singh added.