PowerMin sends note on discom debt rejig to Cabinet

NEW DELHI: Power Ministry has sent the note on financial restructuring of state discoms to the cabinet for final approval, a top ministry official today said.

As per the proposal, the state electricity boards of Jharkhand, Bihar and Karnataka will be allowed to convert their outstanding loans, till March 2013, into bonds as part of an amendment to the discom debt restructuring package.

"We have sent the note to the (Cabinet) Secretariat for the final nod," Power Secretary P K Sinha told reporters here on the sidelines of Indian Energy Summit.

Karnataka along with Jharkhand and Bihar had approached the Ministry seeking this special provision.

Currently, under Financial Restructuring Package (FRP), which was approved by the government last year, 50 per cent of the accumulated debt of the discoms till March 2012 can be converted into bonds.

These bonds will be issued by the distribution companies to the participating lenders, backed by state government guarantees. Balance 50 per cent loans will be restructured by providing moratorium on principal and best possible terms for repayments.

The support under the scheme is available for all participating state-owned discoms on fulfilling short-term mandatory conditions.

The accumulated losses of state power distribution companies are estimated at about Rs 1.9 lakh crore as on March 31, 2011, and Rs 2.46 lakh crore as on March 31, 2012.