Sending a stern message to state-run energy distribution entities (discoms) that refuse to fix their methods and be on a commercially viable path regardless of a number of bailout packages, the Union energy ministry has advised sector-specific lenders PFC-REC that they needn’t lengthen any new credit score line to the discoms, after the exhaustion of the Rs 90,000-crore liquidity window, if the latter don’t self-correct.
“PFC-REC lending norms have been tightened and the prudential norms have been up to date to correspond to the perfect adopted by any monetary establishment,” Union energy minister RK Singh advised FE.
“Any additional mortgage request, aside from the Rs 90,000 crore earmarked for the liquidity infusion scheme will probably be evaluated in keeping with the revised prudential norms,” Singh added.
Clearly, the revised norms will make loss-making, non-compliant ineligible for contemporary credit score.
PFC-REC have been the principal supply of loans for the discoms, as different establishments, together with public sector scheduled business banks, are nearly out of bounds to them, given the prudential requirements they comply with.
Monetary losses of discoms surged 83% yearly to Rs 61,360 crore in FY19, an evaluation by PFC confirmed. Losses of 5 states — Andhra Pradesh, Tamil Nadu, Madhya Pradesh, Telangana and Uttar Pradesh — comprised 88% of the full discom losses within the nation. The losses are attributed to delayed subsidy disbursal by the state governments, inefficient billing and tariff assortment and insufficient tariff hikes.
“Underneath the revised norms, discoms will be capable to get contemporary loans from PFC-REC, supplied they chart a trajectory for loss discount which is accredited by their respective state governments and in addition the Union energy ministry,” Singh mentioned. If the discoms fail to traverse the glide path for mixture technical and business (AT&C) loss discount, as sanctioned by the Centre and states, the loans will probably be recalled.
Owing to deteriorating funds, the discoms usually are not in a position to pay energy mills on time, inflicting dues to mount. Overdues — dues owed by discoms to mills greater than 60 days — stood at a whopping Rs 1.2 lakh crore throughout the nation on the finish of July, as per the federal government’s Praapti portal. To clear such dues, the Centre had introduced the liquidity infusion scheme below the Aatmanirbhar Bharat package deal.
PFC and REC have acquired mortgage functions for an mixture quantity of Rs 1.6 lakh crore below the liquidity scheme to this point. Out of this, `68,000 crore has been sanctioned, of which Rs 24,000 crore has been disbursed.
The Cupboard has lately allowed a one-time rest to the eligibility standards for discoms to avail working capital loans below the scheme by permitting PFC-REC to lend discoms even past the cap of 25% of earlier yr’s income imposed below the Ujwal Discom Assurance Yojana (Uday) scheme.