Rajasthan discoms get relief as Centre agencies cut loan interest rates

Loan rate cuts by Power Finance Corporation and Rural Electrification Corporation ease debt pressure on Rajasthan discoms, freeing funds for power infrastructure

Two financing agencies of the central government have provided “significant relief” to power distribution corporations (discoms) of Jaipur, Jodhpur and Ajmer by lowering interest rates on loans, said an officer of the Rajasthan energy department.

 

The Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) lowered rates after Chief Minister Bhajan Lal Sharma met Union Power Minister Manohar Lal Khattar in New Delhi recently.

 

“It will result in reducing the debt burden of the distribution corporations,” said the Rajasthan officer. “The savings generated can be used for the expansion, strengthening and operation of power infrastructure.”

 

The loss-making discoms of the three cities have a combined debt burden of around ₹98,000 crore. They had to pay more than ₹7,800 crore in interest payments in FY26, up until January. Interest rate relief will have a “positive impact” on their balance sheets, said the officer.

 

PFC and REC, which fund capital expenditure for power infrastructure, account for around 75 per cent of the total debt owed by the three discoms. PFC has approved a special interest rate of 9.60 per cent for Jaipur discom — a reduction of up to 1.40 per cent — on long-term capital loans that previously carried an interest rate of more than 11 per cent. For Jodhpur and Ajmer discoms, the rate has been fixed at 10.50 per cent.

 

REC will provide a special interest rate of 9.60 per cent to the three discoms on medium-term loans — a reduction of up to 1.40 per cent. Furthermore, REC has extended concessions to the Jaipur discom on capital loans that previously carried interest rates of more than 11 per cent, reducing the term to 9.60 per cent.

 

Both PFC and REC have reduced interest rates on short-term financing by 0.90 per cent; this facility is now available at an interest rate of 8.85 per cent.