Central government introduces Rs 900 billion liquidity package for discoms

The central government has announced Rs 900 billion liquidity infusion package for distribution companies to help them clear outstanding dues. The package is part of the measures announced by the finance minister in the first tranche of the stimulus package to combat the economic disruption caused by Covid-19. Power Finance Corporation Limited (PFCL) and REC Limited will provide loans to discoms to the extent of Rs 900 billion against state government guarantees. The amount will be used by discoms to pay their dues (aggregating to Rs 940 billion) to transmission and generation firms. The loans would be disbursed in two tranches and will be linked to reforms such as increasing digital payment interfaces, prepaid metering in government departments and making action plans for loss reduction, among others. The government has also planned to waive off or defer the fixed charges and interstate transmission charges by Power Grid Corporation of India Limited (Powergrid), NTPC Limited, Damodar Valley Corporation (DVC) and other central public sector enterprises (CPSEs) for the period from March 24-May 17, 2020. It is expected that the Ministry of Power (MoP) will issue an advisory to CPSEs for deferring the fixed charges for electricity not drawn and collecting it in three monthly instalments.

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