Business

Loan window to clear power gencos’ Rs 70K dues

Sentinel Digital Desk

New Delhi: Faced with a demand slowdown and increasing financial stress of the distribution companies, the Centre is considering a new loan window for States to help settle their rising dues to the power generation companies.

Under the new plan, state-run lenders Power Finance Corporation (PFC), Rural Electrification Corp. Ltd (REC) and Indian Renewable Energy Development Agency (IREDA) would offer loans at concessional rates to discoms to settle immediate needs of the generation companies and prevent any disruption in power supplies.

Power producers’ total outstanding dues owed by distribution companies stands at Rs 69,558 crore by September-end 2019. This is growth of 37 per cent over the same month last year, reflecting stress in the sector.

Distribution companies owed a total of Rs 50,583 crore to power generation companies in September 2018, according to web portal and app namely PRAAPTI (Payment Ratification and Analysis in Power procurement for Bringing Transparency in Invoicing of generators).

Sources said that new loan window will help gencos settle some of the dues that discoms owe to them. This will enable them to maintain power generation at levels that did not cause any disruption in supplies across the country.

To make the loan less painful for financially stressed State discoms, the lending institutions are expected to keep the interest rate closer to their cost of funds. This would be done by fixing interest rate on loans on a cost plus a norminal fee. (IANS)