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

App aid for healthcare

Courier services and sales teams have soared into efficiency using smartphone apps to monitor deliveries, visits, timeliness and performance. Taking a leaf from their book, Gujarat is equipping accredited social health activists (ASHAs) and midwives with smartphones and an app to bring down infant and ma

Government divests 12% stakes in RITES; IPO opens on June 20

The railway infrastructure consulting PSU, RITES Limited is coming up with its IPO on June 20, 2018, as the government of India is selling its 24 million equity shares (12%) stake in the Mini Ratna PSU. As an initial public offering 25,200,000 equity shares are offered in which employee reservation portion

“This initiative is for future generations”

Speaking to Governance Now, Gujarat chief minister Vijay Rupani elaborates on the Sujalam Sufalam scheme to rejuvenate talavdis and desilt reservoirs and lakes. He also speaks on water, politics, and cons

Water by the pondful

It’s 10 am and in Dhandhuka town of Ahmedabad district, the sun is already scorching. A dry lake, which was desilted and deepened a few weeks back, has been turned into a venue for a fete. Shamianas have been erected, women in bright sarees and men and children in their best clothes flock the venue,

Thugs of Hindustan

This story may sound apocryphal but it was recounted by LK Advani in one of his casual conversations. Talking about Morarji Desai, he said that despite his idiosyncrasies, he was a man of impeccable integrity. To buttress his point Advani recalled this incident: After the Janata Party formed the government

IRCTC listing still lingering despite clearance in 2017

Ministry of railways’ decision of holding the listing of Indian Railway Catering and Tourism Corporation (IRCTC) has exposed its seriousness in listing its public enterprises in stock exchanges. Although the decision was taken one year back, the national transporter does not have a com

Current Issue

Current Issue

Video

CM Nitish’s convoy attacked in Buxar

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter