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RK Singh: Govt finalising a Rs 3.5-lakh-cr result-oriented package for discoms

Power Minister RK Singh said that the government is close to finalising a Rs 3.5 lakh crore financial package for ailing discoms

  • The Power Minister said that the scheme envisages providing a gross budgetary support of Rs 1.2 lakh crore over five years

  • However, the package will be result-oriented where the distribution companies will have to invest first and get money later

New Delhi: Union Minister for Power RK Singh said on Thursday that the government is close to finalising a Rs 3.5 lakh crore financial package for ailing discoms (power distribution companies) which would be result-oriented and will require them to turn around losses in order to avail the funds. In an interview, Singh said that state power distribution companies with high losses will be mandated to either privatise operations or appoint distribution franchisees and invest in infrastructure upgradation.

Package will give discoms gross budgetary support of Rs 1.2 lakh crore

The Power Minister said that the scheme envisages providing gross budgetary support of Rs 1.2 lakh crore over five years. However, the package will be result-oriented where the distribution companies will have to invest first and get money later. The scheme will come with a gross, he said.

National Tariff Policy cleared by GoM

Singh also said that a GoM (Group of Ministers) headed by Union Home Minister Amit Shah has cleared the National Tariff Policy which would soon be sent to the Union Cabinet for consideration. The tariff policy is a major reform that is expected to address the financial burden on the power sector. However, the reform is being opposed b state governments and discoms because it proposes levying penalties for load shedding.

The reforms and the relief package come close on the heels of liquidity infusion to the tune of Rs 90,000 crore announced by Finance Minister Nirmala Sitharaman on May 13. The package is aimed at helping ailing discoms tide over the unprecedented cash crunch in the wake of the COVID lockdown. As per the scheme, two state-run companies — PFC and REC — will disburse Rs 90,000 crore concessional loans to distribution companies to be used to pay their power bills.