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Nod to power discoms’ debt recast likely by month-end

According to reports, the government is likely to give the green signal this month for the restructuring of debt held by state-run power distribution companies (discoms), whose precarious financial health has raised default worries.

“Understanding is that by the end of this month the (restructuring of discoms’s debt) should (be approved) because everybody is in a hurry,” the Department of Financial Services Secretary, Mr D K Mittal, said on the sidelines of an Assocham event here.

Banks and financial institutions are estimated to have an exposure of about Rs 1.20 lakh crore to various power discoms.

According to Mr Mittal, “It is for the Power Ministry to take a final call on restructuring debt of power discoms, by taking approval of the competent authorities… funds will flow to discoms as much as they have been restructured.”

The poor financial health of discoms is largely blamed on lower tariff realisation as well as mounting aggregate technical and commercial losses.

Finance Ministry, Power Ministry and the Planning Commission are working in co—ordination for restructuring the debt liabilities of discoms.

Providing relief of three to four years for utilities from repaying loans are among proposals under consideration.

According to sources, one of the pre-requisites for improving the financial health of discoms is commitment towards regular revision of electricity tariffs.

The Shunglu panel, set up by the Planning Commission, last year estimated accumulated loss of discoms at Rs 82,000 crore during the 2006—10 period. The panel was set up to look into the financial health of discoms.

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