Five states to receive second tranche of PFC-REC loan
Going forward, the rating agency said, short-term securitization volumes could be affected by the increase in COVID-19 cases and the resulting restrictions imposed in a number of states.
Five states have submitted their requests for the second tranche of loans under the Rs 1.25-lakh-crore cash injection program that was announced by the Center as part of the Atmanirbhar Bharat package to clear contributions from electricity distribution companies (discoms) to electricity producers.
The second tranche of disbursements will soon be released for Andhra Pradesh, Telangana, Rajasthan, Bihar and Manipur, Union Energy Minister RK Singh told FE. Uttar Pradesh and Tamil Nadu should present their detailed plan in the coming week to benefit from the second tranche, added the minister.
The main beneficiaries who received sanctioned loans under the program are Tamil Nadu (Rs 30,230 crore), Uttar Pradesh (Rs 27,432 crore), Maharashtra (Rs 14,310 crore), Telangana (Rs 12,652 Rs crore), Karnataka (Rs 7,247 crore) and Andhra. Pradesh (Rs 6,835 crore).
As much as Rs 46,074 crore was paid to all nightclubs by PFC-REC at the end of January as part of this program.
Funding of discoms under the liquidity injection program is designed to be carried out in two tranches, both of which are special long-term bridging loans with a maximum term of 10 years.
The release of the first component of the loan is subject to the commitment of the government of the state concerned to pay the departmental contributions to its discom and the establishment of a credible mechanism to release the subsidies – intended for consumers but channeled. by discoms – in advance. The discoms will also have to come up with a plan, approved by the governments of the respective states, to reduce their losses.
Stressed discos cannot raise funds at lower rates, even though the interest rate on the PFC-REC special loan will be 150 basis points higher than the rate they are borrowing at. “Only states that have met the conditions while receiving the first tranche will be eligible to obtain the second tranche of the loan,” Singh said. The delinquencies – overdue by 45 days or more – owed to generators by nightclubs across the country stood at Rs 1.27 lakh crore at the end of January, 27% more than the same period last year.
