Discom reforms: Power Ministry seeks Finmin help

The power ministry will ask the finance ministry to advise banks to follow prudential norms laid down by sectoral financiers Power Finance Corp and REC stringently while lending to electricity distribution utilities.The move is aimed at stopping distribution companies from bypassing the guidelines when they approach banks instead of REC and PFC. The proposal comes just after the Centre kicked off a Rs 3.03 lakh crore perform-or-lose scheme for discoms. “Of late, discoms have been approaching banks for finance bypassing the reforms by not taking loans from REC and PFC. The power ministry’s aim is to inform the banks about risks of financing,” a senior power ministry official said. “In the interest of both discoms and banks, as well as the viability of the system, the ministry plans to request the finance ministry (to advise banks).”The central government proposes to set right power distribution companies, saddled with estimated consolidated debt of Rs 5 lakh crore last fiscal year, through the reform-based scheme and the additional borrowing space for states.

from Economic Times https://ift.tt/3i42uvq