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Power Minister R K Singh has directed state-run Rural Energy Corporation (REC) and Power Finance Corporation (PFC) not to grant loans to Discoms which are making heavy losses unless they draw up a road map for reducing them.
Singh took a review meeting of the two financing arms of the Power Ministry REC and PFC yesterday, the power ministry said in a statement.
It said he has directed the two institutions that before granting of loan either for capital expenditure or for non-capital expenditure, the adherence to prudential norms must be carefully observed.
Many distribution companies (Discoms) have been making heavy transmission and distribution (T&D) losses and it may be difficult for them to repay their loans, he said.
The loans, he said, should not be granted until and unless they draw up a road map for reducing the losses over a definite time-frame (not more than 2 years), and are able to show that they are taking action in accordance with the road map.
He further said that it will be vetted by the power ministry and only then will the grant of loan be considered for the Discoms.