₹850 billion in funds to be raised over the next 12 months, REC announces.
New Delhi, August 13: REC Limited announced that it has sanctioned over ₹300 billion (~ $4 billion) as of July 31, 2020 to distribution companies (DISCOMs) in the country. This sanctioned amount is a part of the Central Government’s stimulus package injected into the Indian economy to help it recover from the coronavirus crisis.
The government had earlier announced a Covid-19 relief package which included liquidity injection to State DISCOMs in the form of state government guaranteed loans through REC limited and the Power Finance Corporation (PFC).
According to data from the Ministry of Power’s payment ratification and analysis portal, DISCOMs owed renewable generators ₹97.25 billion (~ $1.31 billion) in overdue payments (exclusive of dues which are under dispute) covering 538 invoices, as of the end of May 2020.
Earlier, Finance Minister Nirmala Sitaraman had announced a liquidity package of ₹900 billion (~ $12.03 billion), to be infused through REC and PFC in two equal instalments, to help DISCOMs clear their dues during the ongoing crisis.
Also, Central public sector power generation companies have been asked to give rebates to DISCOMs, following which, it will be passed on to the final consumers.
Among other highlights, REC plans to raise ₹850 billion (~ $11.4 billion) over the next year, as revealed through the unaudited financial results for the quarter ended June 30, 2020, through issuance of secured or unsecured non-convertible bonds and debentures through private placement.
In an earlier statement, REC said that it had approved ₹5.24 billion (~$69.6 million) in loans to renewables, which accounted for 4% of the total loans extended during the quarter. The loan approved by REC was down from ₹15.87 billion (~ $210.9 million), accounting to 7% of the overall loans disbursed in the same quarter in 2019.
Previously, Mercom has written about DISCOMs weighing down the entire sector due to their inability to pay power generators on time, manage their losses, and iron out other inefficiencies, acknowledging that although the Ministry of Finance has spoken about the government working on a new tariff policy to address limiting cross-subsidies, penalize DISCOMs for unnecessary power cuts, and prevent them from passing their losses to the consumers, among other issues, the focus must also be on formulation of a long term plan that addresses issues across the board.
