REC kicks off discom package with Rs 2,500 crore to Maharashtra

Union government-controlled Rural Electrification Corporation (REC) has disbursed Rs 2,500 crore to Maharashtra power distribution company under the Atmanirbhar scheme. With this, the Shiv-Congress alliance ruled state has become the first to avail of this facility.

A similar amount would be disbursed to the state by Power Finance Corporation shortly, said a senior official.

REC has sanctioned another Rs 3,300 crore for Andhra Pradesh, Rs 2,000 crore for Punjab and Rs 2,032 crore for Rajasthan. “While all the states will get 10 years loan at 9.5 per cent, Punjab will get five years at 9 per cent,” said the official.

Discoms across the country owed Rs 1.08 trillion to generators as in April.

Under the loan terms, states are required to have prepaid smart metering in government electricity connections. Besides, states should have a liquidation plan for subsidy and electricity bills payable by the state government to the discoms. A system for timely payment of subsidy and electricity bills in future is also required.

Over the next three to four years, aggregate technical and commercial (AT&C) losses and average cost of supply and revenue have to be brought down. The AT&C or power supply losses due to inefficient system of discoms across the country was at 20.8 per cent and its financial loss was Rs 18,316 crore as on December 2019.

Besides REC, Power Finance Corporation would be disbursing loans under the Rs 90,000 crore scheme that seeks to address liquidity problems of both discoms and generators. 

Union Finance Minister Nirmala Sitaraman, in her 15-point agenda to boost the economy, last month announced a special loan scheme for the discoms. State governments would need to submit guarantees against loans given to discoms. PFC and REC will disburse loans in equal proportions.

The two lenders have raised money at over 7 per cent and further fundraising would depend on the requirement. Uttar Pradesh, Telangana, Jharkhand and Karnataka have also evinced interest on taking loans under this scheme. Maharashtra, Uttarakhand, Bihar and Tamil Nadu have asked for working capital loan totalling Rs 24,331 crore.

Union minister of state for power, new and renewable energy R K Singh on Thursday said total requests for loan from states stand at Rs 93,138 crore. The sanctioned amount in the first tranche would be close to Rs 20,000 crore.

Under the last discom reforms scheme UDAY, the national average AT&C loss was supposed to come down to 15 per cent by March 2019.