Telangana govt comes to the rescue of Discoms

Issues orders to guarantee loan of Rs 12,600 cr from PFC, REC

By Author  |  Published: 5th Jul 2020  11:04 pmUpdated: 5th Jul 2020  11:10 pm
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Hyderabad: The State government, in an effort to bail out State power distribution companies, TSSPDCL and TSNPDCL, has issued orders to guarantee special long term loan of Rs 12,600 crore from Power Finance Corporation (PFC) and Rural Electrification Corporation Ltd (REC). Both the Discoms have been facing cash crunch since payment of bills are pending due to the three month long Covid 19-induced lockdown.

The Chairman and Managing Director of Power Finance Corporation, New Delhi, while referring to the announcement of Government of India regarding Special Economic Package – Covid-19, informed that the PFC framed its policy for offering financial assistance under the liquidity injection package announced by the Union government and that the purpose of financial assistance under this package was for clearance of outstanding dues of State power utilities and requested to forward proposal under the policy if the utilities of the State are interested.

Following the announcement, the Chairman and Managing Director of TSSPDCL (Telangana State Southern Power Distribution Company) and CMD of TSNPDCL (Telangana State Northern Power Distribution Company Ltd) informed that the total outstanding dues to them was Rs 14,333 crore as on March 31, 2020. Telangana Discoms had to receive Rs 12,609 crore from the State government departments as on March 31, 2020 and that Discoms have to provide unconditional and irrevocable State government guarantees to avail Special Long Term Transition Loan for Covid -19 from PFC, and REC, and therefore requested for unconditional and Irrevocable State Government guarantee to avail the loan.

The State government, after careful examination of the proposal, accorded government guarantee for Rs 12,600 crore to the TSSPDCL and TSNPDCL as security towards the loan to be sanctioned, 50 per cent by PFC and 50 percent by REC, under Special Long Term Transition Loan – Covid-19, as per terms and conditions laid down by the Union government.

However, the State Power Minister G Jagadish Reddy has urged the Centre to reduce the 9.5 per cent rate of interest offered by the PFC to 8.5 per cent. He said the Discoms are already facing financial constraint and will not be able to take the additional burden. The PFC and REC offered 10-year-loan to State Discoms at 9.5 per cent under the Rs 90,000 crore liquidity infusion package.

While the details of the duration of the loan opted by Telangana are yet to be announced, it is said that interest rates are fixed at 8.75 per cent for a three-year loan, 9 per cent for five years, 9.25 per cent for seven years, and 9.5 per cent for a ten-year-term loan. The interest rates will be valid for the next 60 days. Other States that have opted for these loans include Andhra Pradesh, Uttar Pradesh, Meghalaya, Jammu and Kashmir and Tamilnadu.

The Telangana Discoms that have agreed for part payment of lockdown period power bills from domestic consumers has been facing trouble in collection of the dues. Consumers are complaining that they have been burdened with non-telescopic calculation for the cumulative period of three months of lockdown resulting in inflated amounts. Earlier the government allowed consumers to pay bills for the months of March, April and May based on 2019 meter readings with a promise that the balance amount will be adjusted to the present day meter reading.

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