State-run non-banking finance firms REC and Power Finance Corporation (PFC) have reportedly sanctioned loans worth about Rs 68,000 crore so far under the Rs 90,000 crore liquidity package announced for stressed power distribution utilities. The fund is expected to create buoyancy in the sector which has been hit-hard by coronavirus-infused lockdown.
As part of the Modi government's mega stimulus package worth Rs 21 lakh core, Union Finance Minister Nirmala Sitharaman in May had announced liquidity injection worth Rs 90,000 crore for stressed power discoms.
"State-run non-banking finance firms REC Ltd and Power Finance Corporation (PFC) have sanctioned loans worth about Rs 68,000 crore so far under the Rs 90,000 crore liquidity infusion package for discoms announced in May," news agency PTI quoted a source as saying.
As per the source, the first tranche of loans have also been sanctioned to Andhra Pradesh, Telangana and Uttar Pradesh. "The Rs 90,000 crore package would be fully utilised after Tamil Nadu (Rs 20,000 crore) and Bihar (Rs 3,500 crore) submit their formal proposals under the package," the source added.
Uttar Pradesh leads the chart for seeking the highest credit at Rs 20,000 crore, followed by Telangana (Rs 12,000 crore), Karnataka (Rs 7,000 crore), Andhra Pradesh (Rs 6,000 crore), Maharashtra (Rs 5,000 crore). Punjab, Rajasthan and Jammu & Kashmir have sought around Rs 4,000 crore each.
The loans under the package, which was for discoms to pay off outstanding dues up to March this year, will be co-funded by PFC and REC in equal proportion. The loans would be sanctioned in two equal tranches. The package was announced on May 13, 2020.
In a regulatory filing, REC recently said that it has already sanctioned amounts of more than Rs 30,000 crore till July 31, 2020, as part of this liquidity package to discoms.
According to rating agency ICRA, discom losses to balloon during the current fiscal unless tariff reforms are urgently implemented. The expected poor financial performance this year is on the back of a 5-6 per cent decline in demand for electricity in FY21 against FY20. The rating agency said demand is now expected decline by 3.5 - 4.0 per cent in Q2 and Q3 of FY21 and only a marginal recovery of about 1.0 per cent in Q4 FY21, which would, in turn, suppress thermal plant load factor (PLF) to about 50-51 per cent in FY21 against the earlier estimate of 54 per cent. PLF in fiscal 2020 was 56 per cent.
The agency has also revised the audited book losses for discoms for FY19 to Rs 49,600 crore against the provisional estimate of Rs 28,000 crore reported earlier. The losses have also reached closer to the pre-UDAY level, as discoms were not able to raise the tariff for consumers.
By Chitranjan Kumar