The Rural Electrification Corporation (REC) has rescheduled loans worth Rs 340 crore each to Grid Corporation of Orissa (Gridco) and Haryana Vidyut Prasar Nigam (HVPN).
REC is a public financial institution set up for assisting state electricity boards (SEBs), state government departments and rural electricity cooperatives.
Talks for rescheduling loans are on with the electricity boards of Andhra Pradesh, Madhya Pradesh, Uttar Pradesh, West Bengal and Bihar. APSEB and MPSEB together owe REC about Rs 1,300 crore. The seven states together have defaulted on payment of Rs 2,500 crore. Subsequently, REC had stopped funding these SEBs.
REC has worked out a new package for SEBs, under which repayment of one-third of the default amount will make them eligible for fresh loans.
"The rescheduling of loans has been undertaken to revive assistance to the boards. These are states which require assistance to a great extent," said REC chairman and managing director Divakar Dev.
Sources also said REC had little option but to reschedule the loans. Although these loans are covered by state government guarantees, any attempt to enforce them would have led to a political outcry. As a part of the package, REC has put the escrow account mechanism in place.
HVPN owes REC Rs 340 crore. It has already defaulted on payment of Rs 75 crore. The balance consists of assorted loans which have to be repaid in nine years.
Under the new package worked out by REC, one-third of the default, which is Rs 25 crore, has to be cleared by December. The balance Rs 50 crore has to be paid over seven years. The outstanding of Rs 265 crore has to be paid over the next seven years in monthly instalments.
For Gridco, the default and outstanding have been clubbed into a single loan of Rs 340 crore which has to be repaid over the next five years.
The deal has been signed between REC and HVPN. In the case of Gridco, confirmation has been received, but the agreement is yet to be signed.
REC disbursed Rs 1,100 crore in 1997-98 and made a net profit of Rs 120 crore.
