March 6, 2021

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Energy Ministry Writes to States/UTs Extending Rs 90Ok Crore Package deal

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The Ministry of Energy has written to all states/UTs extending Rs 90,000 crore monetary bundle to help the careworn DISCOMs.

A communication on this regard was despatched on Could 14.

“The bundle for energy sector will considerably cut back the burden of Discoms for sustaining distribution of electrical energy as provided by gencos/transcos throughout these troublesome instances,” stated Energy Minister RK Singh.

The federal government had on Could 13 determined to make an infusion of liquidity of Rs 90,000 crore by Energy Finance Company (PFC) and Rural Electrification Company (REC) as part of the ‘Atmanirbhar Bharat Abhiyan’.

Below this intervention, REC and PFC would prolong particular long-term transition loans as much as 10 years to DISCOMs.

The letter despatched to States/UTs mentions that REC and PFC shall instantly prolong loans to DISCOMs which have headroom for additional borrowing inside the working capital limits prescribed underneath UDAY.

Additional, the DISCOMs that do not need headroom underneath UDAY working capital limits however have receivables from the state authorities within the type of electrical energy dues and subsidy not disbursed will even be eligible for these loans to the extent of receivables from the state authorities.

Since these loans are long-term and aren’t in opposition to the working capital requirement of the DISCOMs, with compensation safety from the state authorities, UDAY Working capital limits won’t be relevant.

As well as, the respective states could request for leisure of restrict to the federal government of India for the DISCOMs that do not need receivables from states or headroom accessible underneath the working capital limits imposed underneath UDAY.

The letter says the COVID-19 pandemic and the resultant lockdown has adversely affected the facility sector funds, making a state of affairs of acute liquidity disaster throughout the worth chain within the energy sector as a consequence. On this state of affairs, the liquidity infusion within the energy sector worth chain will assist to tide over the money stream downside. This cash will assist discoms to repay a lot of the cash that they owe to energy mills (Gencos) and transmission corporations( Transcos). It’s going to assist restart the virtuous cycle of money stream within the energy sector.

The loans might be supplied to the DISCOMs in opposition to ensures by the state governments which might be used to clear liabilities of CPSE Gencos/Transco, IPP and RE mills. Complete funding quantum might be about Rs 90,000 crore. The funding can be performed in two tranches of Rs 45, 000 crore every, it provides.

To additional carry the discoms out of the monetary stress, the Energy Ministry as per one other communication issued on Could 15 has determined to defer the fastened cost on energy not scheduled of Central Gencos for lockdown interval and it is going to be repaid in interest-free three equal instalments in subsequent months.

In the course of the lockdown interval, there was a major drop in demand as a result of industrial and business items had been closed.

In line with the Energy Buy Agreements, Discoms pay a set cost to Gencos for all of the contracted amount, even when energy just isn’t drawn. This has burdened the Discoms as a result of they should pay for the facility that was not used in the course of the lockdown interval.

They’ve additionally been instructed a rebate of 20-25 per cent on energy provided (fastened value) together with Inter State Transmission Expenses (ISTS) payable to PGCIL for the lockdown interval. The Discoms have been requested to go on these value financial savings to the tip customers which is able to result in discount in electrical energy value to the customers.

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