Power distribution companies to get credit ratings from April 1

Power distribution companies to get credit ratings from April 1

 IANS   New Delhi     Last Updated: February 8, 2013  | 18:09 IST

Minister of State for Power Jyotiraditya Scindia on Friday said electricity distribution companies (discoms) in India's states would get credit ratings from April 1.

Ratings are a guideline for lenders of discoms to assess their financial risks, particularly in a context where the power sector is beset with problems of fuel availability for generation and other bottlenecks like clearance for mining projects that is affecting domestic coal production.

"CARE (CARE Ratings) and ICRA (Investment Information and Credit Rating Agency of India) have been given charge to give the ratings," Scindia told media persons after a meeting with banks and financial institutions to discuss financial issues of the power sector.

The government in September last year approved a restructuring package for discoms' debt burden, which stood at a staggering Rs 2,46,000 crore at end of March 2012.

Under the scheme, 50 per cent of the short-term outstanding liabilities would be taken over by state governments, and the balance would be restructured by providing moratorium on principal and best possible terms for repayments.

"Regular tariff revision is essential not just to ease lending, but to boost private sector investment," Scindia said.

Five states - Tamil Nadu, Andhra Pradesh, Rajasthan, Haryana and Uttar Pradesh - have committed to the financial restructuring programme (FRP) for discoms.

"Their (the five states committed) total short-term liability is close to Rs 120,000 crore. We are speaking to the finance ministry for the approvals so that in the near future, next week, we'll be able to take it forward," Scindia said after the meeting of state power ministers in New Delhi on Tuesday.

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