New Delhi, August 19
The Centre on Wednesday accredited a proposal to present one-time rest in working capital restrict norm for discoms underneath the Ujwal DISCOM Assurance Yojana (UDAY) to get loans as a part of the Rs 90,000 crore liquidity infusion scheme.
After the Cabinet assembly, Union Minister Prakash Javadekar in a press convention mentioned, “Power sector has a problem. There is a slump in power consumption. The bills are not being collected by them. PFC and REC have been allowed to give loans above the limit more the 25 per cent working capital limit. This will increase liquidity of the state discoms”.
“The working capital limit is 25 per cent of last year’s revenue. Now, the limit is relaxed,” he additional mentioned.
According to an official assertion, the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has accredited a one-time rest to Power Finance Corporation (PFC) and REC Ltd for extending loans to discoms above limits of working capital cap of 25 per cent of final yr’s revenues underneath UDAY.
One-time rest will assist in offering liquidity to the ability sector and guarantee funds by discoms, it added.
The COVID-19 outbreak and consequent nationwide lockdown have exacerbated liquidity issues for the ability sector.
Revenues of the ability distribution firms have nosedived as persons are unable to pay for the electrical energy consumed, whereas energy provides, being a necessary service, have been maintained.
Energy consumption has decreased considerably. The liquidity of the ability sector isn’t anticipated to enhance within the brief time period, as financial exercise and energy demand will take a while to select up. There is, thus, a right away must infuse liquidity within the energy sector for the continuation of energy provide, it added.
Finance Minister Nirmala Sitharaman had in May introduced the Rs 90,000 crore liquidity infusion into cash-strapped discoms, going through demand hunch as a result of lockdown to include COVID-19.
However, a few of the discoms weren’t eligible for getting loans underneath the package deal as a result of they weren’t assembly working capital restrict norm underneath the UDAY scheme.
Under the UDAY, the banks and monetary establishments are restricted to lend working capital as much as 25 per cent of a discom’s income within the earlier yr.
The restriction was a part of the UDAY scheme, accredited in November 2015 by the Union Cabinet for the revival of debt-laden utilities.
Besides, the discoms can get the mortgage underneath the package deal towards the receivables from state governments to clear their dues.
But a few of the discoms didn’t have headroom underneath each the provisions. Thus, the ability ministry had proposed to chill out working capital restrict norm in order that these discoms can avail loans underneath the package deal to clear their dues. PTI