Multiple conditions on discoms 

#GS3 #Economy 

Centre imposes many riders for States to avail ₹90,000-crore package 

  • The Central authorities have imposed a number of conditions on State governments and their power distribution companies (discoms) to avail themselves of benefits from the ₹90,000-crore package. 
  • Called the ‘Special Long Term Transition Loan to Discoms for COVID-19’, the financial assistance is meant to help the discoms clear their dues to power producers, both belonging to the Central public sector undertakings (PSUs) and the private sector, and transmission companies. To be paid in two tranches, the loan will have a tenure of up to 10 years, including moratorium of not more than 3 years. 
  • The conditions have been stipulated at each stage, according to letters sent by the Central agencies, the Power Finance Corporation (PFC) and the Rural Electrification Corporation (REC), on Saturday to heads of the State utilities.  
  • The discoms should submit an “unconditional and irrevocable” guarantee from the respective State governments with due approval from the State Finance Departments before the first disbursement. 
  • Tamil Nadu Generation and Distribution Corporation (Tangedco) say they are awaiting information on the State-wise breakup of the overall amount, even though the communication of the REC & PFC refers to the amount outstanding as on March 31, 2020. 
  • In respect of the Tangedco, the figure is around ₹16,000 crore, of which approximately three-fourths are due to the Central PSUs. 
  • As part of “pre-commitment conditions,” the discoms should have arrangements for self-assessment by end consumers and digital payment of the bills, apart from installation of “smart” or pre-paid meters at the premises of the government departments and attached offices.  
  • If a State fails to pay the power bill and subsidy within 60 days of the due date, it will be charged with an additional interest of 0.25% on the outstanding loan amount. 
  • The insistence on “smart” or pre-paid meters is being made so that the discoms get their dues regularly. 
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