Centre, states working for full solution of discoms' debt: Goyal

The central government is working together with states towards a permanent solution to the problem of the massive debt burden of electricity distribution companies (discoms), Power Minister Piyush Goyal said on Tuesday.

"We had very good meetings (with states chief secretaries). The states and the centre are working together as one. The states are also conscious of their responsibilities," Goyal told reporters here on the sidelines of the National Biogas Convention organised by the ministry of new and renewable energy.

"The centre is handholding them and supporting them in various ways to ensure that together we don't look at the short-term solution to this problem. In two to three years, the discom distress would become a thing of the past.

"I am delighted that all the states uniformly have supported our ideas," he added.

With the debt of state-run utilities shooting beyond Rs.300,000 crore, Prime Minister Narendra Modi chaired a meeting on Monday on how to resolve the issue, an official source here told IANS.

A recent World Bank study conducted at the request of the government has said despite the impressive strides in the Indian power sector, distribution to end-consumers remained the weakest link.

Expressing concern over the fragile financial health of such discoms that was preventing fresh investments for better services, the bank said the total accumulated losses as in 2013-end for the sector stood at Rs.290,000 crore, or 3 percent of the country's gross domestic product.

"These losses are overwhelmingly concentrated among distribution companies and bundled utilities -- state electricity boards (SEBs) and the state power departments," said the study, adding this had pushed up the power sector's debt to over Rs.500,000 crore.

Faced with acute financial stress, many of these are unable to buy power.

Goyal said last month that the central government cannot be considered as a bailout bank for helping debt-ridden distribution companies and states will have to find a way out of the crisis.