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

IndianOil registers highest ever profit of Rs 19,106 crore

 IndianOil posted a net profit of Rs 19,106 crore for 2016-17 fiscal as compared to a profit of Rs 11,242 crore in the last fiscal. The income from operations for the financial year 2016-17 was Rs 4,45,373 crore as compared to Rs 4,06,828 crore in the previous fiscal. IndianOil`s income from

Maiden flight of HAL’s light utility helicopter

 Hindustan Aeronautics Limited (HAL) carried out first flight of light utility helicopter (LUH)-PT-2 on May 22 at its Bengaluru-based facility. The flight duration was about 22 minutes and pilots reported nil snag, HAL said.   “These maiden flights of indig

The rise and rise of muscular nationalism

 Narendra Modi is like Greek mythology’s King Midas: whatever he touches turns into gold. Most people in this country are left dazzled by his ability to make dramatic announcements with a statuesque flourish.   The past three years of the Modi government have left the

BHEL unveils 270 MW thermal unit in Maharashtra

Bharat Heavy Electricals Limited (BHEL) has added another feather to its cap by successfully commissioning another 270 MW thermal unit at RattanIndia Nasik Power Limited’s 5x270 MW thermal power project at Sinnar (Nasik) in Maharashtra.   This is the fourth unit to be c

India is second largest stainless steel producer in the world: steel minister

Chaudhary Birender Singh, minister for steel, said that the Indian steel industry is at the cusp of a significant milestone by becoming the second largest stainless steel producer in the world, leaving behind Japan. He said that the steel sector is only an example of all-round development in India. The c

Are you satisfied with three years of Modi government?

Are you satisfied with three years of Modi government?



Video

प्रभुनाथ सिंह को हत्याकांड में उम्रकैद की सजा

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter