₹90,000-crore ‘power backup’ will help ease liquidity pressure on discoms
Companies’ financial sustainability, turnaround remains a matter of concern
- The Centre’s decision to provide ₹90,000 crore liquidity injection for the funds-starved electricity distribution companies (Discoms) is likely to ease the liquidity pressure in the Indian power sector and likely to benefit the consumers with continuity of uninterrupted power supply.
- The liquid package of ₹90,000 crore to clear the backlog of pending power purchase bills.
- This will help generators to clear their bank dues, and purchase coal to supply power.
- This wound ensure continuity of uninterrupted power supply.
- The loan will be provided against the ₹94,000 crore receivables of the discoms and will be secured against receivables, and additionally guaranteed by the respective state governments.
- The funds will be infused within a couple of days by offering concessional loans to state electricity discoms, which would be 150 basis points lower than the usual lending rates by the PFC and REC.
- According to Vivek Sharma, senior director - Energy, CRISIL Infrastructure Advisory, the ₹90,000 crore stimulus to clear outstanding dues of power generators is a big positive as it will ease liquidity pressure.
- However, appropriate structuring for bond issuance against guarantee will be critical to raise funds in the current tight liquidity situation.
- The loan tenure would be of 7-10 years with a moratorium of two years.
- PFC and REC have been raising funds in tranches and at concessional rates by sourcing it through bonds under a special window to the power sector.