PFC and REC to Extend Loans to State Power Discoms

As per a senior official, the government is making stricter conditions for extending loans from Power Finance Corp and Rural Electrification Corp to state power distribution companies to help them clear their dues to power generation plants.

The official further adds, “The special loans by PFC and REC will have stricter performance norms like reducing commercial losses, bringing financial discipline, and implementing prepaid metering, besides state government guarantees, timely release of subsidies and timeframe for payment of government department dues.”

Distribution utilities of many states are not keen on borrowing money to pay their power bills, as per the officials.
Discom dues to conventional generation companies are at Rs 85,952 crore, government data shows. Of this, Rs 68,546 crore is overdue from states like Rajasthan, Tamil Nadu, Uttar Pradesh, Andhra Pradesh and Telangana.

A similar initiative taken by the Centre to make loans accessible to state discoms from PFC, REC and Indian Renewable Energy Development Authority to pay renewable power bills has not found any takers.

According to an official, “PFC has recently sanctioned Rs 1,500 crore to Andhra Pradesh but not specifically to pay dues.”