Discom bonds will not be force-fed to PFC and REC

Power minister estimates saving of nearly $30 billion

gb | November 10, 2015


#electricity   #piyush goyal   #power finance corporation pfc  


GN Bureau
New Delhi

Union power minister Piyush Goyal has said that the implementation of the revival package of the near bankrupt state-run discoms will result in total savings of nearly $30 billion (nearly Rs 1.99 lakh crore) by FY18-19.

Goyal assured that the state-run Power Finance Corporation and Rural Electrification Corporation, which have an exposure of around $20 billion (Rs 1.33 lakh crore) to the discoms, will not be forced to buy the bonds to be issued by the respective states under the scheme at 8-8.5% yield. He also said this is aimed at protecting the balance sheet of PFC, which gets loans at 7.5-8%.

"We will not stress PFC and REC's balance sheets with these bonds which will be priced at 8-8.5%. It could only affect their working capital requirement," he said, adding this is the reason why the government will be selling these bonds in the market.

Claiming that there is a huge appetite in the market for such bonds as the renewable and transmission sectors are doing well, the minister said he has already spoken to pension funds, provident funds and insurers.

He said once the scheme is implemented PFC and REC can unlock their $20 billion (nearly Rs 1.33 lakh crore) exposure and invest further in projects.
"I believe they (PFC and REC) can even expand their loan book in the next two to three years. Both can fund up to $60 billion (Rs 3.99 lakh crore) in the next five years in fresh investment," Goyal said.

The banking sector has a huge exposure to the near bankrupt state-run discoms to the tune of Rs 4.3 trillion in principle alone, and over Rs 5 trillion if interest and unpaid dues are counted. These discoms have accumulated losses of about Rs 3.8 trillion.

 

Comments

 

Other News

Gandhian movement after Gandhi failed: Ram Guha

The Gandhian movement in India, after Gandhi’s death, failed, says Ramachandra Guha, and blames Vinoba Bhave for it. But the movement found new, fertile grounds around the world and succeeded in bringing about a change in South Africa, the US and elsewhere. It is high time it returned home. Of cour

When religion, politics and Bollywood come together

Tavleen Singh, noted journalist and political commentator, has turned to fiction, with her debut novel ‘The Actor’ (HaperCollins India). Set in the near future, it has a superstar, Amit Singh, turning to politics, when the political landscape is dominated by prime minister Guru Gaynendraj

Cabinet approves setting up of Integrated Transport & Logistics Authority

The union cabinet, chaired by prime minister Narendra Modi, on Tuesday approved the setting up of a Special Purpose Vehicle (SPV), called Integrated Transport & Logistics Authority (ITLA), to strengthen research, planning, appraisal, monitoring and impact assessment within the broad domains of Transp

Why foundational literacy and numeracy is key to school education

Foundational Literacy and Numeracy (FLN) are often described as the building blocks of education. Yet, their significance goes well beyond a child’s ability to read a sentence, write a response or solve a basic mathematical problem. These foundational skills shape how children understand the world,

When police data becomes the algorithm

For decades, policing has followed a familiar sequence: a crime occurs, the police respond, an investigation produces records and those records become part of the institutional memory of the criminal justice system. Artificial intelligence is beginning to alter that sequence. Instead of merely recording

Before India voted, the framers worried about the referee

“We are making a Constitution forever and not only for today.” Shibban Lal Saksena said this in the Constituent Assembly on June 15, 1949. He was warning that a ruling party might one day choose a loyalist to run India’s elections. Seventy-seven years later, the Supreme Court is wrestli

Upcoming Conferences



-->

Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter