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No aid to states under debt restructuring plan

No aid to states under debt restructuring plan

The NDA government, which is reworking the debt restructuring plan to strengthen the loss-making electricity distribution companies (discoms), is unlikely to extend any financial assistance to states under the new scheme.

Instead of giving financial packages to power distribution companies, the Ministry of Power will suggest the models to be adopted to improve the efficiency of electricity discoms by reducing losses, plugging pilferage, cutting transmission and distribution losses, a senior official in the Ministry of Power told Deccan Herald.

“Making the discoms self-reliant is the central government’s priority than making them depend on loans,” the official said, adding that soon, a new restructuring plan will be unveiled to enable the states to work towards providing 24x7 electricity by 2019.

As per the new proposals, the government may also ask some of the central public sector undertakings like NTPC or NHPC purchase stakes in state discoms and pump some money and introduce professionalism in the functioning of electricity boards, said the official.

With the combined debt of all distribution companies rising above Rs 2 lakh crore, the previous UPA government had introduced a restructuring plan in 2013. However, there were not many takers among states. After failure of the scheme, the NDA government decided to rework the plan to make it more attractive than giving financial assistance to states.

As per the previous government’s scheme, 50 per cent of the accumulated debt of the discoms till March 2012 could be converted into bonds. These bonds will be issued to the participating lenders, backed by state government guarantees. The remaining 50 per cent loan will be restructured by providing moratorium on principal and best possible terms for repayments.

Power Minister Piyush Goyal recently said the government aims to attract $50 billion investment in transmission and distribution sector in the next 20 years and is preparing short, medium and long term plan for strengthening the discoms.

With the 40 per cent of electricity going unpaid for in some states, the discoms have no money to purchase power from market to supply to consumers despite availability of sufficient power in the grid.

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