PowerMin to seek Cabinet nod for tweaking debt rejig plan

Some changes need to be done in the financial restructuring package to include Jharkhand, Bihar, AP, Karnataka: Scindia

The Power Ministry will seek Cabinet approval for tweaking the financial restructuring package for accomodating Jharkhand, Bihar, Andhra Pradesh, Karnataka in its debt rejig plan for the electricity boards.

"Some changes need to be done in the financial restructuring package to include the states of Jharkhand, Bihar, Andhra Pradesh, Karnataka," Power Minister Jyotiraditya Scindia said on being asked about the progress of the Financial Restructuring Package (FRP).

However, he declined to elaborate on the changes which the Ministry will be proposing.

According to sources, there are certain accounting issues which are coming in the way of debt restructuring of Andhra Pradesh discoms and the state of Jharkhand is yet to complete its unbundling process of the state electricity boards to avail the advantage the scheme.

Unbundling process involves disintegrating the generation, transmission and distribution verticals of the state electricity boards.

The financial debt recast plan of the government is for the distribution companies therefore the states are required to hive off their electricity distribution business in order to avail the package.

The government, last year, approved restructuring of Rs 1.9 lakh crore debt of State Electricity Boards in a move to turnaround the near-bankrupt power distribution companies.

Under the scheme approved by the Cabinet Committee on Economic Affairs, 50% of the short-term outstanding liabilities would be taken over by state governments.

Balance 50% loans would be restructured by providing moratorium on principle and best possible terms for repayments.

As part of mandatory condition, 50% of the outstanding liabilities up to March 31, 2012 is to be taken over by the state governments.

This shall be first converted into bonds to be issued by discoms to participating lenders, duly backed by the state government's guarantee.

So far the states of Uttar Pradesh, Tamil Nadu, Rajasthan and Haryana have agreed to sign up for the Centre's debt revamp plan.

"Tamil Nadu has opened its $2 billion bond issue and other states have drawn up plans for the same," Scindia added.