Delhi govt allows discoms to avail loans under Atmanirbhar package

Since the loans would need a state guarantee and Delhi is a Union Territory, it has written to ministry of home affairs to provide state guarantee on behalf of Delhi

The Delhi government has given approval to the three privately owned power distribution companies (discoms) to avail of a special loan scheme for discoms announced under the Atmanirbhar Bharat package announced by the finance ministry.

Since the loan will require state guarantee and Delhi is a Union Territory, it has written to the Ministry of Home Affairs (MHA) to provide state guarantee on behalf of Delhi.

If approved, it will make Delhi discoms the first to apply for this loan. The finance minister, in her 15-point agenda to boost the economy, announced a special liquidity infusion scheme for the ailing power distribution sector.

The Centre is hopeful of infusing close to Rs 90,000 crore into discoms. The loan is to strictly pay off dues of power generating and transmission companies.

Power Finance Corporation (PFC) and Rural Electrification Corporation will disburse the loan.

The three discoms — Reliance Infrastructure-owned BSES Rajdhani Power (BRPL), BSES Yamuna Power (BYPL), and Tata Power Delhi Distribution (TPDDL) — have asked for a loan of Rs 6,350 crore. It will be used to clear dues towards the two Delhi government-owned power generating units — Indraprastha Power Generation Company and Pragati Power Corporation — and Delhi Transmission.

“Due to power purchase costs and significant drop in collection efficiencies from consumers due to Covid-19 outbreak, the sector will require liquidity infusion for sustenance. Delhi discoms have requested a loan from PFC under the proposed liquidity injection package of Rs 90,000 crore for meeting liquidity crunch due to the impact of Covid-19,” said Delhi government in its letter to the MHA.

Business Standard has reviewed the letter.

Of the total loan sought, BRPL has asked for Rs 3,050 crore, BYPL Rs 2,300 crore, and TPDDL Rs 1,000 crore to repay the principal outstanding dues of power generation units in Delhi.

Unlike earlier discoms’ reforms scheme, the current one does not entail any debt takeover by the state government, making it easier for even private discoms to participate. Compared to the average performance of state-owned discoms across the country, the three private discoms in Delhi have better operational and financial parameters.