State-owned power distribution companies are expected to get ₹1.45 trillion from Power Finance Corporation (PFC) and its unit REC under the one-time settlement scheme that starts on Friday, August 5, said a report from Mint.
"Power Finance Corp. Ltd (PFC) and its unit REC Ltd may lend up to ₹1.45 trillion to electricity distribution companies (discoms) that are owned by states under an ambitious one-time settlement that will kick in from Friday," Mint quoted two government officials saying so.
The dues owed to power generation companies (gencos) that are owned by states are also expected to be cleared under the scheme that will run for four years. Gencos can be in the public or private sector, and owned by the central government or states, whereas discoms are mostly owned by states. Each state has several discoms, the report further added.
As Mint reported, last week, Prime Minister Narendra Modi drew attention to ₹2.5 trillion worth of dues of both gencos and discoms.
He highlighted that discoms were owed more than ₹60,000 crore by government departments and local bodies, and ₹75,000 crore by state governments on account of the supply of subsidized electricity. Modi urged states to clear their dues to gencos—by clearing the dues to discoms—while launching a ₹3 trillion ‘Revamped Distribution Sector Scheme’, Mint reported.
Rating agency CRISIL in an earlier report had said that the "government’s recent move to relax the late payment surcharge (LPSC) on the dues of discoms to gencos, and the guarantee of monthly payments over the next four years to the latter, is part of a multi-pronged approach to resolving prolonged and seemingly intractable challenges of the sector."
The attempt clearly is to reduce the risks for both gencos and discoms. The easing of LPSC would save ₹2,000-2,500 crore for the top 15 power-consuming states," CRISIL said.