Fresh Liquidity Infusion: PFC, REC may link discom loans to state guarantees

Centre-run power sector lenders PFC and REC are likely to seek state government guarantees against the additional loans that would be given to state-run power distribution companies (discoms) to help them cope with the current coronavirus-induced crisis. According to government sources, the modalities of funding the discoms to enable them to pay generators are currently being worked out. However, such funding would require the relaxation of FRBM norms for a number of states which have crossed their borrowing limits under the current norms.

Discoms are finding it difficult to continue meter reading exercises and collect payments from consumers amid the country-wide lockdown to contain the outbreak of coronavirus, which in turn, is raising the risks of clearing the bills of power generators. Overdues — payment default of 60 days or more — from discoms to power producers were already at Rs 80,387 crore at February-end. In the wake of such developments, the Union power ministry is deliberating on a plan to infuse liquidity in through Centre-run PFC-REC. However, the monetary value of the relief has not been ascertained yet.

financial express
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