On the plea of Karnataka, Bihar and Jharkhand, the Power Ministry has moved the final Cabinet note on the Rs. 1.9 lakh crore financial streamlining of the state distribution companies (discoms) seeking to extend the deadline for restructuring to March 2013.
The Power Ministry, acting on the request of the state electricity boards (SEBs) of Jharkhand, Bihar and Karnataka, has sent a note to the Cabinet Secretariat that would allow them to convert their outstanding loans, till March 2013, into bonds as part of an amendment to the discoms debt restructuring package.
“We have sent the note to the Cabinet Secretariat for the final nod,” Power Secretary, P.K. Sinha told reporters on the sidelines of Indian Energy Summit in New Delhi.
It may be noted that Karnataka along with Jharkhand and Bihar had approached the Power Ministry seeking this special provision.
Under Financial Restructuring Package (FRP) approved by the Cabinet Committee on Economic Affairs (CCEA) last year, 50 per cent of the short-term outstanding liabilities would be taken over by state governments and the balance 50 per cent loans would be restructured by providing moratorium on principle and best possible terms for repayments. The loans taken over the State governments were to be converted into bonds to be issued by discoms to participating lenders, duly backed by the state government's guarantee.
The support under the scheme will be available for all participating state-owned discoms on fulfilling short-term mandatory conditions. The takeover of liability by state governments from discoms in the next two-five years by way of special securities and repayment and interest payment to be done by state governments till the date of takeover.
The accumulated losses of state power distribution companies are estimated at about Rs. 1.9 lakh crore as on March 31, 2011, and Rs. 2.46 lakh crore as on March 31, 2012. As per the latest figures available, the total debt of the SEBs stands at around 2.2 lakh crore.
