₹90,000-crore ‘power backup’ will help ease liquidity pressure on discoms 

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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. 
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