Uday scheme to save discoms Rs2 lakh crore: Goyal
10 Nov 2015
Union power minister Piyush Goyal has said that the implementation of the revival package of the heavily loss-making state-run power distribution companies will result in total savings of nearly $30 billion (Rs1.99 lakh crore) by FY18-19.
"If all goes as planned, the Uday scheme (the nomenclature of the revival package involving taking away the Rs 4.3 trillion debt of the discoms' books), will help save nearly $30 billion in total by FY15," Goyal told investors in New Delhi on Monday evening.
The banking sector has a huge exposure to the discoms to the extent of Rs4.3 trillion in principal alone, and over Rs7 trillion if interest and unpaid dues are counted. These discoms have accumulated losses of about Rs3.8 trillion.
Goyal assured that the state-run Power Finance Corporation and Rural Electrification Corporation, which have an exposure of around $20 billion (Rs1.33 lakh crore) to the discoms, will not be forced to buy the bonds to be issued by the respective states under the scheme at 8-8.5 per cent yield.
He also said this is aimed at protecting the balance sheet of PFC, which gets loans at 7.5-8 per cent.
"We will not stress PFC and REC's balance sheets with these bonds which will be priced at 8-8.5 per cent. It could only affect their working capital requirement," he said, adding this is the reason why the government will be selling these bonds in the market.
Claiming that there is a huge appetite in the market for such bonds as the renewable and transmission sectors are doing well, the minister said he has already spoken to pension funds, provident funds and insurers.
He said once the scheme is implemented PFC and REC can unlock their $20 billion (nearly Rs 1.33 lakh crore) exposure and invest further in projects.
"I believe they (PFC and REC) can even expand their loan book in the next two to three years. Both can fund up to $60 billion (Rs 3.99 lakh crore) in the next five years in fresh investment," Goyal said.
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