Five States – Rajasthan, Haryana, UP, Tamil Nadu and A.P. – have given their “in-principle consent” for participating in the financial restructuring package (FRP) scheme designed by the Centre for improving the health of their respective electricity distribution companies.

 

In addition, Jharkhand, Kerala and Bihar “have shown willingness to join the scheme,” according to a reply given today by the Ministry of Power to a question raised in the Rajya Sabha.

 

In September last year, Cabinet Committee on Economic Affairs approved the FRP to aid the ailing discoms. Under the scheme, half of the short term liabilities of the discoms would be taken over by the respective state governments. The lenders would be given state-government guaranteed bonds. The rest of the loans would be rescheduled, with a moratorium on the principal. This rescheduling would be “accompanied by concrete and measurable action by the discoms and the state governments to improve the operational performance of the companies.”

 

Further, Government of India would chip in with incentives—a grant—measured in relation to energy saved by reducing transmission losses beyond a benchmark, and capital reimbursement support of 25 per cent of principal repayment by state governments on the liability taken over.

 

For this purpose, the Ministry of Power sought and got Rs 1,500 crore from the Budget.

 

The accumulated losses of the state discoms have been estimated at Rs 1.9 lakh crore, as at the end of 2010-11.

 

 

ramesh.m@thehindu.co.in 

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