According to reports, the Power Ministry would extend the financial re-structuring programme for the sick State Electricity Distribution Companies (Discoms) till June 30. The extension is for those Discoms that had not taken up the scheme before March 31.
States such as Kerala, Karnataka, Jharkhand, Himachal Pradesh and Manipur are interested in taking up the scheme and have written to the nodal Ministry. Till now, five States – Tamil Nadu, Andhra Pradesh, Haryana, Uttar Pradesh and Rajasthan – with more than Rs 1 lakh crore of bad short-term debt have decided to participate in the scheme.
The Finance Ministry will come up with transactional finance mechanism (TFM) for restructuring in a week’s time, a Senior Power Ministry official told Business Line.
The TFM along with guidelines for issuance of bonds and securities would be notified by the Power Ministry within the next two weeks. According to the Centre’s package, half of Discom losses would be taken up by the respective State. For the remaining half, distribution utilities would get three-year moratorium on principal payment.
In the second phase, the Government expects the distribution utilities to become cash-surplus. Thereby the remaining debt would be restructured for seven years.
Every Discom has a nodal bank that would fine-tune its restructuring.
The Discoms would issue bonds on behalf of State Governments for 50 per cent of the debt. The coupon rates for these bonds will be at premium over the market rates (advantage of 25 basis points). However, the upper cap may be nine per cent.
These bonds would not be traded like other securities. Only the respective lenders to the Discoms will buy these bonds. The State Government will bear the interest and these would be getting transferred to the State account as per Fiscal Responsibility and Budget Management Act. A Central Level Monitoring Committee headed by Member (Energy) of Planning Commission will monitor the re-structuring.
The Discoms will take steps to reduce distribution losses and increase electricity tariff based on power purchase fluctuations.