A special package is being worked for Tamil Nadu,
Andhra Pradesh, Uttar Pradesh, Bihar and
Rajasthan
Even as the state electricity distribution companies
(discoms) are faced with a whopping Rs.1.95 lakh crore losses, the Power
Ministry is readying a bail-out package that could include tariff revision
every nine months, issue of bonds for half of the losses and backing discoms
with guarantees for 50 per cent of their loans.
The bail-out package is being worked out jointly by
the Power Ministry, the Finance Ministry and the Planning Commission in a bid
to restructure the discoms.
The move for a rescue package comes after the
Finance Ministry and the Reserve Bank turned down the Power Ministry’s proposal
seeking refinance of Rs.1.95 lakh crore accumulated losses incurred by these
discoms. While seeking refinance, the Power Ministry stated that such debt was
not viable and could increase the non-performing assets of banks and other
financial institutions.
Officials in the Power Ministry said that a special
package was being worked for States such as Tamil Nadu, Andhra Pradesh, Uttar
Pradesh, Bihar and Rajasthan. These states
were faced with mounting losses and found themselves in worse condition. A
committee under the Secretary, Financial Services, has been set up to work out
a plan for the seven stressed-out states.
Power cuts are an order of the day in South Indian
States, and the situation is slowly turning bad in North
India also. Majority of the discoms are faced with mounting loan
repayments, pending subsidy receipts, piled-up payment to power producers,
increasing utility losses due to low tariff hikes, rising burden of fuel prices
and the like. Following the objections raised by the Finance Ministry and the
RBI, the Power Ministry has gone into a strategy mode, and is working on the
idea of issuing bonds by discoms to cover up to 50 per cent of debt and the
possibility of State governments sharing a part of the burden. According to
official sources, comprehensive bail-out package is expected to be placed
before the Cabinet for approval in a month or two.
The bail-out package is likely to include a
condition that would make it mandatory for the state discoms to revise power
tariffs every nine months if they are to receive any kind of benefit from the
central package. The government has already made its intentions clear to rate
the discoms based on their financial performance and, therefore, a tariff hike
across the country is imminent.
The Power Ministry has also suggested in its XII
Plan draft before the Planning Commission that an amendment should be made to
the Electricity Act, 2003, allowing the State Electricity Regulatory
Commissions to hike tariffs without waiting for a nod from the government or
proposals from the discoms.
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