CCEA clears changes to discom debt restructuring package

The Cabinet Committee on Economic Affairs today approved Power Ministry's proposal of amending the debt restructuring package for electricity distribution companies (discoms).

As per the proposal, the state electricity boards of Jharkhand, Bihar and Andhra Pradesh would be allowed to convert their outstanding loans till March 2013 into bonds as part of an amendment to the discom debt restructuring package.

These states had approached the Power Ministry seeking this special provision to extend the date by a year. Sources said the proposal (amendment to the financial restructuring package) has been cleared.

Under the current Financial Restructuring Package (FRP), which was approved by the government last year, 50% of the accumulated debt of the discoms till March 2012 can be converted into bonds. These bonds will be issued by the distribution companies to the participating lenders, backed by state government guarantees.

The balance 50% loans will be restructured by providing moratorium on principal and best possible terms for repayments. The support under the scheme is available for all participating state-owned discoms on fulfilling short-term mandatory conditions.

The accumulated losses of state power distribution companies were estimated to be about Rs 1.9 lakh crore as on March 31, 2011 and Rs 2.46 lakh crore as on March 31, 2012.