CCEA relaxes norms for discom loans under liquidity infusion scheme

The Cabinet Committee on Economic Affairs (CCEA) has approved a one-time relaxation to Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) for extending loans to discoms above limits of working capital cap of 25 per cent of last year’s revenues under Ujwal DISCOM Assurance Yojana (UDAY).

The one-time relaxation would help in providing liquidity to the power sector and ensure payments by state governments to discoms. Discoms could borrow only up to 25 per cent of their previous year’s working capital under the limits stipulated in the UDAY scheme. As part of its stimulus package to bring the economy back on track after the coronavirus lockdown, the government announced the liquidity injection for discoms as part of the Atmanirbhar Bharat Abhiyan, backed by state governments’ guarantees. However, some discoms were unable to avail the loan package for clearing dues as discoms did not have the headroom for borrowing more working capital under UDAY, nor the requisite state receivables to clear their dues.

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