BackDiscoms’ finances key for 24x7 power: Jayant Sinha
Sinha says govt looking at all possible options to manage the stress
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Mumbai: The central government’s commitment to provide uninterrupted power supply for all can be met only by ensuring the financial health of distribution companies in states, minister of state for finance Jayant Sinha said on Thursday.
Speaking at a conference organized by brokerages Edelweiss Capital Ltd and Wells Fargo and Co., Sinha said the centre, the state governments and the Reserve Bank of India (RBI) in the past entered into agreements to improve the health of these companies. However, there was a need to find better and more efficient ways to implement these programmes.
Money-losing distribution companies in states such as Haryana, Uttar Pradesh and Rajasthan are already implementing a financial restructuring plan approved by the centre and RBI.
Under this plan, half of the short-term debt of these companies are converted into bonds by the respective state government, while the remaining half is restructured by banks.
In its financial stability report released Thursday, RBI pointed out banks had already restructured some ₹ 53,000 crore worth of debt by distribution companies. “The moratorium period for repayment of the principal amounting to ₹ 430 billion ( ₹ 43,000 crore) ended by March 2015. Considering the inadequate fiscal space, it is quite likely that the state governments might not be in a position to repay the overdue principal/instalments in time, and banks may be forced to continue classifying these loans as SMA-2 (special mention accounts) as is being currently done on account of delayed servicing of interest," the RBI report said.
“We are looking at all possible options to manage the stress," Sinha said, without explaining the nature of these solutions and the time required to implement them. The minister also stated that the government will provide stable and transparent policies for infrastructure and ensure that there is no unnecessary risk for such projects.
Sinha’s speech also touched upon the various initiatives that the central government had taken over the last year to ensure the infrastructure sector gets adequate financing.
“Apart from budgetary allocation for projects and sanction for more infrastructure bonds, the government is also in the process of putting together a national infrastructure fund (NIF), which will provide ₹ 20,000 crore worth of funds every year for large-scale infrastructure projects," said Sinha. He also said there was significant interest among international investors to partner in large-scale infrastructure projects backed by the NIF.
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