Six States agree to adopt debt recast plan for discoms

Six States have agreed to adopt the debt restructuring plan of the Power Ministry for their State electricity boards (SEBs), according to Minister of State for Power (Independent charge) Jyotiraditya Scindia .

Talking to reporters here on Thursday, Mr. Scindia said Bihar, Andhra Pradesh, Uttar Pradesh, Tamil Nadu, Kerala and Haryana had agreed to the debt recast plan, and were going ahead with its implementation.

“The government is hopeful of executing the debt restructuring soon, which has a deadline of March 31,’’ he added.

Faced with mounting debts (over Rs.2.46 lakh crore as on March, 2012) of the power distribution companies (discoms), the Centre , in October last, came out with a financial restructuring plan. The government would recast debt worth Rs.1.5 lakh crore of SEBs.

As per the financial restructuring plan, the Central Government would provide 25 per cent capital reimbursement of principal repayment by the respective State government on the liability taken over by it. According to the plan, this will be converted into bonds to be issued by discoms to participating lenders, duly backed by State Government guarantee.

Takeover of liability by State governments from the discoms in the next 2-5 years by way of special securities and repayment as well as interest payment to be done by the States till the date of takeover form part of the financial restructuring package. To give more time to SEBs, it is likely that the last date for the States to register for the debt recast plan may be extended.