Liquidity support provides temporary lifeline to discoms: S&P
MUMBAI: The government’s stimulus measures will only provide a temporary lifeline to state-owned power distribution companies as the coronavirus pandemic has increased liquidity pressure for these firms, global ratings agency Standard & Poor’s (S&P) said.
On May 13, Union finance minister Nirmala Sitharaman announced that state-owned lenders PFC and REC will extend Rs 90,000 crore in state-guaranteed loans to government-owned discoms, which owe nearly Rs 94,000 crore to power generation and transmission companies.
“Discoms have been the key structural weakness for the Indian power industry for decades. State government-guaranteed loans could help these companies clear overdue payments, releasing cash to the generation and transmission companies,” S&P Global Ratings credit analyst Abhishek Dangra said.
