PFC and REC are working on loans for state electric discoms

Electricity sector financiers Power Finance Corp (PFC) and are working on loans for public electricity distribution companies to help them pay their electricity dues.

State electricity distribution companies have electricity royalties of ₹1.18 lakh crore to power generators.

Medium- and long-term loans from these financiers will be made available to states that participate in the Department of Energy’s levy liquidation program, a senior official said.

“Special loan products are being developed to enable electricity distribution companies participating in the contribution restructuring program to make timely payment of outstanding contributions,” he said.

Revolving credit interest rates would vary depending on the credit rating of the borrowers.

The two financiers have sought the approval of the Reserve Bank of India for a waiver while financing the contributions of the electricity distribution companies.

According to the RBI’s prudential standards, a lender’s credit exposure to single borrowers must not exceed 25% of its net worth. The RBI’s easing of exposure limits to the power sector expired in March this year.

A new exemption from the banking regular is still awaited, said the official.

Last month, the Department of Energy announced a one-time easing program to allow state electric distribution companies to pay their electricity dues to power-generating companies.

In accordance with the program, the outstanding amount of state electricity distribution companies – including the main and late surcharge – will be frozen. They will have the option to pay the outstanding amount in up to 48 installments. Production companies will have to waive a new surcharge for late payment on the frozen amount.

The total waiver by power generation companies will be ₹19,833 crore over the next 12-48 months.

However, in the event of late payment of a deposit by a distribution service, the late payment surcharge will be due on the entire unpaid amount which was otherwise exempt.

States like Tamil Nadu and Maharashtra that have large unpaid dues will each save over ₹4,500 crore through this relief scheme. Uttar Pradesh would save about ₹2,500 crore while others like Andhra Pradesh, Jammu and Kashmir, Rajasthan and Telangana will pay ₹1,100 crore to ₹1,700 crore less.

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