Centre eases borrowing cap for Discoms

Amaravati: Andhra Pradesh government's efforts to seek special liquidity infusion scheme to revive the financially-distressed DISCOMs and its protest to the Centre over high charges it was paying for buying power from the Central agencies paid off on Wednesday when the Cabinet Committee on Economic Affairs approved a one-time relaxation to the Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) for extending loans to the Distribution Companies (DISCOMs).

The relaxation is above the limits of working capital cap of 25% of last year's revenues under Ujwal DISCOM Assurance Yojana (UDAY). The one-time relaxation would help in providing liquidity to the power sector and ensure payments by the State governments to DISCOMs.

Following the outbreak of the pandemic COVID-19, revenues of the power distribution companies have nosedived as people are unable to pay for the electricity consumed.

Last month, Ajay Kallam, Principal Adviser to the Government, criticised the Centre's policy which made it mandatory for the States to purchase power at Rs 9.44 per unit from NTPC plants. On an average, NTPC was selling power at Rs 4.50 to Rs 5 per unit. "This apart, grid connectivity and transmission and distribution charges are being levied," he added. The Andhra Pradesh government was paying Rs 5.50 lakh per month for drawing power from the Central transmission lines, which was higher than the pirce in the remaining States.

Following protests from AP and also requests from Rajasthan and Punjab, the Centre has now decided to revive financially distressed power distribution companies (discoms).

The three States had sought, cumulatively, Rs 14,664 crore from state-owned lenders -- Power Finance Corporation (PFC) and Rural Electrification Corporation (REC).

In addition, the Centre is looking into the request to extend loans to clear pending dues of the DISCOMs.