Govt announces Rs 90,000 crore package for DISCOMS

In a big relief to crisis-hit power sector, the Centre on Wednesday announced its plan to infuse Rs 90,000 crore liquidity to cash-starved state electricity distribution companies (DISCOMS) .

"Discoms today are facing unprecedented cash flow problems," Finance Minister Nirmala Sitharaman said here while announcing package.

Also Read: Economic Package: FM Nirmala Sitharaman announces EPF contribution relief for businesses and workers

State-owned Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) will infuse the fund by raising Rs 90,000 crore loan from the market against the receivables of discoms. However the state governments have to provide a guarantee, the Minister said.

The Minister said the DISCOMS can utilise this fund to clear their dues to electricity generating companies and transmission firms.

"We want the benefit passed to the customers…we are making it clear that these benefits should pass to the end consumers," she said.

For latest updates on coronavirus outbreak, click here

At present DISCOMS have to pay Rs 94 000 crore to power generation and transmission companies. Due to piling up of huge debt, DISCOMS of many states are struggling to provide quality power.

While availing benefit, the DISCOMS have to introduce several reforms like introducing digital payment systems, for consumers, liquidation of outstanding dues of state
governments, plan to reduce financial and operational losses.

The Central Public Sector Generation Companies shall give a rebate to Discoms which shall be passed on to the final consumers like industries, said the government statement.