New Delhi, Sep 25: A day after it approved restructuring debts of state power distribution companies (Discoms), the government said it would bring a draft model bill for fixing responsibility on state Discoms.
“The Power Ministry would bring out a draft State Electricity Distribution Responsibility bill after due inter-ministerial consultation within a period of 12 months from the approval of the scheme,” Power Minister Veerappa Moily said Tuesday,
Moily said the states would enact the legislation within 12 months from the date of circulation of model legislation by the power ministry to mandate compliance with provisions of the financial restructuring package.
The Cabinet Committee on Economic Affairs Monday approved the scheme for financial restructuring of Discoms.
Under the scheme 50 percent of the outstanding short term liabilities up to March 31 this year are to be taken over by state governments. This would be first converted into bonds to be issued by Discoms to participating lenders, duly backed by state governments’ guarantee.
The balance 50 percent short term loans are to be restructured by rescheduling loans and providing moratorium on principal and at the best possible terms of interest.
The heavily debt-laden State Electricity Boards (SEBs) had piled up losses of around Rs.190,000 crore at the end of fiscal 2010-2011. Among others, Tamil Nadu had losses of Rs.40,183 crore as of March 31, 2011, followed by Rajasthan (Rs.37,200 crore), Uttar Pradesh (Rs.35,211 crore), Madhya Pradesh (Rs.11,491 crore), Punjab (Rs.11.363 crore) and Haryana (Rs.6,505 crore).
“The accumulated losses of the state discoms are estimated to be about Rs.190,000 crore as on March 31, 2011 and Rs.246,000 crore as on March 31, 2012,” Moily told mediapersons.
The objective of the proposed scheme is to enable the state governments and discoms to carve out a strategy for the financial turnaround of the power distribution companies.
“The restructuring/reschedulement of loan is to be accompanied by concrete and measurable action by the Discoms/States to improve the operational performance of the distribution utilities,” an official release on the scheme said.
Moily said the approved scheme is not mandatory for the states and till date only seven states — Rajasthan, Uttar Pradesh, Madhya Pradesh, Andhra Pradesh, Punjab, Haryana and Tamil Nadu — are on board.
The minister also suggested that tariff rationalisation by the states should take place annually.
Meanwhile, Power Secretary P. Uma Shankar Tuesday said there would be no statutory liquidity ratio (SLR) status to restructured power distributors’ bonds.
This implies that the amount of funds on account of these bonds would be blocked for the banks.