Govt’s ₹90,000 cr discom package hits a snag

MUMBAI : The Centre’s plan to inject ₹90,000 crore liquidity into cash-starved electricity utilities has hit a hurdle with state governments hesitating to give guarantees. Power Finance Corp. (PFC) and its subsidiary, REC Ltd, which are supposed to disburse the relief package to state-owned electricity distribution companies (discoms), said states are reluctant to sign the dotted line on guaranteeing the loans and implementing the mandatory reform measures.

“The (power) ministry has been clear that we must lend only if the state guarantees the loan,” a senior executive of PFC said, requesting anonymity. “We’re getting requests from several state-owned discoms on availing the loans. Uttar Pradesh’s discoms have asked for ₹21,000 crore. However, we will disburse these amounts only if the state governments sign a quadripartite agreement with the discoms, PFC and REC, guaranteeing the loans, recognizing past dues and ensuring our conditions for reforms are met. This is where many negotiations are stuck,” said the executive.