Fin Min, RBI turn down power ministry’s refinance proposal
By Vaibhav Aggarwal
Jun 18, 2012
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The State electricity distribution companies (discoms) after incurring an accumulated loss to the tune of 1.95 lakh crores had approached both the finance ministry and RBI with the appeal to provide it refinance.

The finance ministry and RBI, reacting to this, has rejected the appeal saying, "refinancing of such debt is not viable as it will increase non-performing assets (NPAs) of banks and other financers. In the current economic scenario, banks are not in a position to carry additional NPA burden".

Now, Power Ministry , Planning Commission and RBI, are looking into other viable options to help these discoms tide over the losses. Some of these options being discussed, include refinancing of loans of these discoms, issuing of bonds by the discoms in order to fix at least 50 per cent of debt with the rest of the burden taken up by State governments .But no final decision has been taken on the matter.

Power Secretary Mr. P. Uma Shankar said, "We are reviewing various proposals, but nothing has been finalised yet".

Another official said, "The total losses have touched nearly Rs 1.95 lakh crore. Rajasthan, Uttar Pradesh, Punjab, Haryana, Tamil Nadu and Andhra Pradesh share most of the loan burden".

Due to the debt, the discoms cannot buy additional electricity needed to meet the raging demand of the summer season.This has resulted in long hours of power cuts all through the country.


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