Cabinet may take up changes in FRP next week: sources

According to the restructuring plan, the debt of state discoms will be converted into bonds to be issued by them to the participating lenders, backed by state govt guarantees

The cabinet may next week take up amendment to the financial rejig package for the power distribution companies to accommodate fresh debt of four states including Jharkhand and Bihar.

According to sources, the note has been sent to the Cabinet and is likely to be taken up as early as next week.

The changes in current Financial Restructuring Package have been proposed to incorporate the outstanding liabilities of Jharkhand, Bihar, Karnataka and Andhra Pradesh electricity Boards for the last three-six months.

By doing the necessary tweaking, the Power Ministry will be able to bring on board more states to avail the FRP scheme, sources added.

The government last year approved the debt restructuring of state electricity boards to help them turnaround from near bankruptcy. As per the plan, state governments will take over 50 per cent of their outstanding short-term liabilities up to March 31, 2012.

According to the restructuring plan, the debt of state discoms will be converted into bonds to be issued by them to the participating lenders, backed by state government guarantees.

The remaining debt would be restructured by providing a moratorium on the principal and the best possible terms for repayments.

The accumulated losses of state power distribution companies are estimated at about Rs 1.9 lakh crore as on March 31, 2011.

According to sources, these liabilities rose to Rs 2.46 lakh crore as on March 31, 2012.

Support under the scheme will be available for all participating state-owned distribution companies that fulfil short-term mandatory conditions.

The recast plan was formulated based on the report of an expert group headed by B K Chaturvedi, Member (Energy) of the Planning Commission.

So far six states -- Rajasthan, Uttar Pradesh, Madhya Pradesh, Punjab, Haryana and Tamil Nadu -- have come forward to avail the scheme. Of these, Tamil Nadu and Haryana have even issued bonds.