Power Ministry to seek Cabinet nod to tweak debt recast plan

Govt last year approved the debt restructuring of state electricity boards to help turn them around from near bankruptcy

The Power Ministry plans to seek Cabinet approval to tweak the debt recast plan for state electricity boards in order to accommodate fresh liabilities of some units, including those in Jharkhand and Bihar.

"No regulation or rationale of the scheme has been changed," Power Minister Jyotiraditya Scindia told reporters here today after a four-hour meeting with state energy ministers.

The government last year approved the debt restructuring of state electricity boards to help turn them around 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.

The Power Ministry proposes to allow the Jharkhand, Bihar, Andhra Pradesh and Karnataka state electricity boards to include their outstanding liabilities of the past three to six months in the scheme, Scindia said.

"It is a very small tweaking which I will take to the Cabinet in the next two weeks and then the states like Andhra Pradesh, Bihar, Karnataka and Jharkhand will be part of the FRP (financial restructuring package)," Scindia said. "These states will be allowed a window under the FRP to meet the mandatory conditions."

Under the restructuring plan, the debt would be converted into bonds to be issued by the distribution companies to 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.

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.