Bailout for discoms amended

The Cabinet Committee on Economic Affairs on Thursday approved a proposal to extend the deadline for considering restructuring the liabilities of power distribution companies in Bihar, Jharkhand and Andhra Pradesh.

The changed financial restructuring package (FRP) guidelines would allow distribution utilities in the three states to convert their loans due till March 2013 into bonds. Under the current guidelines, half the short-term liabilities of the participating distribution companies, as on March 2012, can be converted into bonds to be issued to lenders, backed by state government guarantees.

"To enable these three states to participate in the scheme, the cut-off date for reckoning the eligible amount of short-term liabilities for issuance of bonds is now shifted to March 2013 from March 2012," said an official statement.

The scheme will be available to these states up to December 31, 2013. The Rs 2.4-lakh-crore FRP, notified in September 2012, is already being implemented in Tamil Nadu, Rajasthan, Uttar Pradesh, Haryana and Himachal Pradesh. The scheme is expected to provide relief to lenders by securing state takeover of debt, ensuring financial discipline in the power distribution sector and making states responsible for improving the revenue flow of distribution companies.