Loans worths Rs 68,000 cr released under discoms liquidity package

The loans under the package will be co-funded by PFC and REC in equal proportion and will be sanctioned in two tranches

As much as Rs 68,000 crore worth of loans under Rs 90,000 liquidity package announced for the stressed power distribution utilities have been sanctioned so far which is expected to create buoyancy in the sector.

Finance Minister Nirmala Sitharaman in May announced the Rs 90,000 crore liquidity infusion into cash-strapped discoms, facing demand slump due to the lockdown to contain Covid-19.

"State-run non-banking finance firms REC Ltd and Power Finance Corporation (PFC) have sanctioned loans worth about Rs 68,000 crore so far under the Rs 90,000 crore liquidity infusion package for discoms announced in May," a source said.

Earlier this week, REC Ltd had said in a regulatory filing, "The company has already sanctioned amounts of more than Rs 30,000 crore till July 31, 2020, as part of this liquidity package to discoms."

The loans under the package will be co-funded by PFC and REC in equal proportion. The loans would be sanctioned in two equal tranches. The package was announced on May 13, 2020.

The source further informed, "The first tranche of credit has also been released to Andhra Pradesh, Telangana and Uttar Pradesh."

"The Rs 90,000 crore package would be fully utilised after Tamil Nadu (Rs 20,000 crore) and Bihar (Rs 3,500 crore) submit their formal proposals under the package," the source added.

Uttar Pradesh tops the chart for seeking the highest credit under the package so far at Rs 20,000 crore followed by Telangana (Rs 12,000 crore), Karnataka (Rs 7,000 crore), Andhra Pradesh (Rs 6,000 crore), Maharashtra (Rs 5,000 crore). Punjab, Rajasthan and Jammu & Kashmir have sought around Rs 4,000 crore each.

The package was for discoms to pay off outstanding dues up to March this year.

While announcing the package, the government had said, "At present the discoms have a total outstanding of Rs 94,000 crore towards power generation firms (gencos).

However, later states demanded to expand the package to include outstanding dues towards power generation and transmission firms for the month of April and May as well.

Earlier in July, Power and New and Renewable Energy Minister R K Singh had noted in a conference with his states counterparts that there was demand for over Rs 93,000 crore under the package from the states.

He had also assured them that the package would also consider outstanding dues of April and May this year. The total outstanding dues later rose to Rs 1.27 trillion in May and Rs 1.33 trillionin June this year as per data on PRAAPTI portal.

After witnessing higher demand for the credit under the liquidity package, the government was mulling to hike it to Rs 1.25 trillion.

The source said, "The power ministry has not issued formal orders to increase the package so far. The two firms are considering states proposals for loans under package with overall limit of Rs 90,000 crore."

PRAAPTI stands for Payment Ratification And Analysis in Power procurement for bringing Transparency in Invoicing of generators. The PRAAPTI portal was launched in May 2018 to bring in transparency in power purchase transactions between the generators and discoms.