States need to do their job on discom debt rejig: Scindia

The Centre has already mooted Rs 1.9 lakh crore debt restructuring plan for discoms

Indicating that the Ministry has done its part in helping with discoms debt rejig, Power Minister Jyotiraditya Scindia today said that it was now for the states "to do their job".

Faced with mounting financial woes of state-run power distribution companies (discoms), the Centre has mooted a Rs 1.9 lakh crore debt restructuring plan for them.

"From our point of view, we have outlined the policy, we have outlined the transitional financial mechanism. Now, the states need to do their job, negotiate with their individual bankers and come back to us," Scindia said here.

He was speaking on the Financial Restructuring Plan (FRP) for discoms.

According to the Minister, eight states including Andhra Pradesh, Kerala, Haryana, Rajasthan, Uttar Pradesh and Tamil Nadu are on board for the restructuring plan.

"There are certain pre-requisites that need to be met (in the FRP). Those are not negotiable. Therefore, if you qualify on those pre-requisites, we are more than happy to assist.

"We have pretty much clinched the issues with the eight states. Now, the eight states are negotiating with their bankers," Scindia said.

The Minister also said discom debt restructuring package for Tamil Nadu has almost been done.

"Tamil Nadu is already pretty much closed...," he said.

Under the FRP, the state government would take over 50% of the debt liabilities of the discoms while the remaining 50% would be re-scheduled by the lenders with moratorium on principal repayment.

Recently, Scindia had said that discoms should be kept cash-neutral pursuant to any subsidy given by the state.

"It (free or cheaper power) should become a subsidy item in the state government's balance sheet, and not on the discom's balance sheet, which today is not the case.

"The states say they will give free power, but the losses suffered by the discoms are not bridged from the state government's coffers and in the end it is the discom that suffers. This is the problem," he had said.