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Web Exclusive | April 2013

Ministries to finalise discoms' debt recast guidelines

The Union government on April 1 said that it would finalise guidelines for the Rs 1.9 lakh crore debt recast plan of the ailing power distribution companies in states within next two days. An official of the Union Power Ministry said that very soon the government will finalise the guidelines for the financial restructuring package for the distribution companies...hopefully by April 3. The guidelines are being worked out by the Finance and Power Ministries.

The government, last year, approved restructuring of Rs 1.9 lakh crore debt of State electricity boards in a move to turnaround the near-bankrupt power distribution companies. Under the scheme approved by the Cabinet Committee on Economic Affairs, 50 per cent of the short-term outstanding liabilities would be taken over by State governments.

Balance 50 percent loans would be restructured by providing moratorium on principle and best possible terms for repayments. As part of mandatory condition, 50 per cent of the outstanding liabilities up to March 31, 2012 is to be taken over by the State governments. This shall be first converted into bonds to be issued by discoms to participating lenders, duly backed by the State government's guarantee.

The support under the scheme will be available for all participating State-owned discoms on fulfilling short-term mandatory conditions. The takeover of liability by State governments from discoms in the next two-five years by way of special securities and repayment and interest payment to be done by State governments till the date of takeover.

The losses of the state power distribution companies (Discoms) were estimated to be about Rs 1.9 lakh crore as on 31st March, 2011.

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