Govt provides further liquidity to power discoms — eases working capital norms

The government has taken further steps to address liquidity issues affecting the discoms during the Covid-19 pandemic.

It approved a special liquidity facility by way of additional working capital loan to be extended by state-owned financing agencies Power Finance Corporation (PFC) and REC.

As per the decision taken by the Cabinet Committee on Economic Affairs (CCEA), PFC and REC will provide working capital loan to discoms this year in excess of the limit of 25 per cent of last year's revenue.

This will be provided under distribution sector reform programme Ujwal DISCOM Assurance Yojana or UDAY.

"We have decided to give this relaxation to help discoms cope with disruptions caused by Covid. It will be available till the situation normalises," said Minister of Information and Broadcasting Prakash Javadekar while briefing media persons about the Cabinet decisions.

The fresh loan option will come as another shot in the arm for financially distressed discoms. Under the Aatmanirbhar Bharat scheme, the Centre has already announced a Rs 90,000 crore liquidity window for discoms to help them pay their dues to generation companies.

Discoms' dues to the gencos have already risen to Rs 1.3 lakh crore as of June, 2020 and their losses are projected to double to around Rs 58,000 crore this year. The outstanding debt with discoms is already over Rs 4.5 lakh crore.

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