Punjab, Rajasthan, Andhra Pradesh seek Rs 14,664 crore to revive discoms

Topics Discoms | Power discoms

Apart from the three states, Uttar Pradesh and Karnataka have also evinced interest for taking loan under this scheme, however an official request is yet to come
The Centre’s special liquidity infusion scheme — to revive financially distressed power distribution companies (discoms) — has seen interest from Rajasthan, Andhra Pradesh, and Punjab.

The three non-BJP governed states have cumulatively sought Rs 14,664 crore from state-owned lenders Power Finance Corporation (PFC) and Rural Electrification Corporation (REC).

Last month, the Finance Minister announced a special loan scheme for discoms, in her 15-point agenda to boost the economy. The size of the scheme is pegged at Rs 90,000 crore. The loan is strictly for clearing the pending dues of discoms to power generation firms — which stood at a record Rs 1.08 trillion as of April.

Senior government sources said the loan requests by these states were “under process”. The respective state governments would need to submit a guarantee against the loans. PFC and REC will disburse the loans in equal proportions.

“The amount that will be disbursed to discoms will be less than requested, and in tranches,” said a senior PFC official. The rate of interest will be in the range of 9.0-9.5 per cent. The official added that they had recently borrowed at above 7 per cent. 


“With the 150 bps spread allowed under this scheme, we will lend to states at above 9 per cent,” said another official.

To borrow more from this scheme, said the officials, PFC and REC will issue bonds based on the initial demand from these states. Officials of PFC and REC expect this amount to be Rs 20,000 crore.

“The power ministry is in touch with domestic lenders such as LIC, EPFO, as well as private and government banks, which had earlier subscribed to the discom bonds. The government expects them to participate this time too,” said an official. Besides these states, Uttar Pradesh and Karnataka have also evinced interest, though an official request is yet to come. “UP, Karnataka, Telangana, Jharkhand, and Jammu & Kashmir are states that have indicated their interest. They have also indicated the desired amount. Applications from their side are expected by the end of month,” said another official.

When approved, this will take the total amount sanctioned to Rs 67,368 crore.


Maharashtra, Uttarakhand, Bihar, and Tamil Nadu have asked for working capital loans amounting to Rs 24,331 crore. One for Maharashtra, of about Rs 2,500 crore, has already been sanctioned, according to the official cited above. R K Singh, MoS for power, new and renewable energy, said on Thursday that the total request for loans stood at Rs 93,138 crore.

To avail of these loans, state governments will need to clear dues of government departments to discoms, and also give a state guarantee to lenders. The discoms will also need to indicate a trajectory of loss reduction — both financial and operational.
The national aggregate technical and commercial loss (AT&C) or (power supply loss due to inefficient system) of discoms stood at 20.8 per cent, with its financial loss at Rs 18,316 crore as of December 2019.



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