Power Min to approach Cabinet for tweaking FRP for some states

States of Jharkhand, Bihar, AP and Karnataka will be allowed a window under the FRP to meet the mandatory conditions: Power Min

The Power Ministry will soon approach the Cabinet for allowing it to incorporate certain changes in the government's debt recast plan for the electricity distribution companies, in order to accommodate 4-5 states.

"There are 4-5 states where we need to tweak the FRP (financial restructuring package) process slightly. I will be taking that to the Cabinet shortly for approval," Power Minister Jyotiraditya Scindia said while addressing the conference of state power ministers here today.

"The states of Jharkhand, Bihar, Andhra Pradesh and Karnataka will be allowed a window under the FRP to meet the mandatory conditions," Scindia said. However, he did not elaborate those compulsory conditions.

He further added that the response from the states on the Centre's debt recast plan has been good, and around six states have come forward to avail the benefits under the scheme.

"Tamil Nadu and Rajasthan (state electricity boards) have already issued the bonds, while UP, Haryana and Himachal Pradesh are in the process," Scindia added.

In order to provide breather to the debt-laden distribution companies, the government approved the financial rejig plan for the discoms last year.

As per the plan, state governments will take more than 50% of the outstanding short-term liabilities of the discoms up to March 31, 2012.

The debt would then be converted into bonds to be issued by discoms to participating lenders, duly backed by State Government guarantee.

The accumulated losses of the state power distribution companies (Discoms) are estimated to be about Rs 1.9 lakh crore as on 31st March 2011.