Discom loan restructuring backed by states
As suggested by the Centre, major states agreed to the plan of restructuring loan for power distribution companies (discoms) worth Rs 1.2 lakh crore, including revision of tariffs and roping in the private sector.
The state government will take over half the short term outstanding loan after discoms issue bonds to lenders. The maturity of these bonds will be 15 years. The remaining 50 per cent of the liabilities will be rescheduled and serviced by discoms with a three-year moratorium.
State governments will have to ensure that electricity tariffs are revised, release subsidy in advance, metering and audit are undertaken. In addition, the loans given to discoms will have to be converted into equity by the state governments and ensure that the gap between the average revenue and the average cost of supply is wiped out over a three to five year period.
Initially, several states were reluctant towards the package as it was against the first proposal, where 50 per cent of the burden is lenders’ responsibility. However, no choice was left for banks as the fresh loans flow had dried up.
To read more real estate news:
Corruption to be blamed for high prices in Mumbai realty sector
Source: Economic Times
Centre, Discoms, fresh loans, Loans, outstanding loan, Power distribution companies, Private sector, restructuring loan, Revenue, revision of tariffs, State government
