This one-time time liquidity infusion will be used to pay the central public sector power generation companies, transmission companies, independent power producers and renewable energy generators.
May 14, 2020
As part of its strategy to bring India’s battered economy back on track, the government will provide INR 90000 crore liquidity injection for the fund-starved electricity distribution companies (DISCOMS) under the ‘Aatmanirbhar package’.
This was announced by finance minister Nirmala Sitharaman as one of the 15 measures in the first tranche to combat the economic disruption from the coronavirus lockdown, that has worsened the already precarious finances of power discoms.
This fund will help in clearing the outstanding dues of discoms by state owned financial institutions. Mint reported about the proposed power sector package earlier.
The liquidity injection for the discoms will work like this. State-owned Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) will infuse the liquidity by raising an amount of about INR 90,000 crore from the market against the receivables of discoms. The state governments will provide a guarantee.
State-owned PFC and REC have $80 billion by assets and are the largest lenders to the power sector. The idea is to clear the payment backlog with the concessional loans guaranteed by the respective state governments.
These loans would be disbursed in two tranches and will be linked to certain reforms such as increasing digital payment interfaces; prepaid metering in government departments and making action plans for loss reduction among others.
