PM Meets Officials of Power Utilities to Tackle Mounting Debt
outlookindia 2015-09-14 18:04

Prime Minister Narendra Modi today met the top brass of power utilities, particularly electricity distribution companies (discoms), to review their performance and discuss the issue of their burgeoning debt.

"The Prime Minister had met this morning with officials of power utilities, especially discoms, to take stock of their performance and the issue of increasing debt of discoms," a source said.

The combined debt of power distribution companies (discoms) stands at over Rs 3 lakh crore. Faced with acute financial stress, many of these are unable to buy power.

The speculation is rife that the government is working out a bailout package for the debt-ridden discoms so that the government can achieve the goal of providing power to all.

However, last month, Power Minister Piyush Goyal had ruled out any financial package for the discoms, saying the government of India cannot be considered as "a bailout bank" and the states would have to find the solution.

"Some states have serious crisis (power) looming large. But at the end of the day, the Government of India can only facilitate the turnaround of these discoms. And we cannot finance it," he had said.

On extension of the financial restructuring package (FRP), the minister had said, "The government has not finalised any such extension of the old plan."

Originally introduced in April 2012, the three-year long FRP was implemented in October 2013.

In an attempt to restore power-purchasing capacity of the debt-heavy discoms and enable banks to recover their loans, the Cabinet Committee on Economic Affairs had approved the scheme for financial restructuring of the state discoms in September 2012.

"FRP was not a very long-term sustainable proposition. It was finalised in March 2012 and implemented by October 2013 and by which time, nearly Rs 1 lakh crore of additional losses were accumulated. So, the entire plan became a non-starter," Goyal had reasoned.
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