Financial restructuring package extended till July 31

The bonds to be issued by the State Electricity Distribution Utilities (Discoms) for re-structuring their bad debts would come at 45 basis points premium — 25 basis points extra compensation for non-statutory liquidity ratio status and 20 basis points incremental return, said Power Secretary P. Uma Shankar.

The bonds will have Government security.

These 45 basis points would be in addition to the market rates decided on the particular day to launch the bonds.

Bonds with SLR status are attractive for investors/banks as they are more liquid compared to other securities.

The Government has also extended till July 31 the financial re-structuring programme for the sick Discoms. This is because Jharkhand, Bihar and Kerala have shown interest in taking up the scheme.

Till now, Uttar Pradesh, Tamil Nadu, Rajasthan, Haryana and Andhra Pradesh have decided to take up the debt-rejig scheme, said the Power Secretary.

According to the Centre’s package, half of the Discom’s losses would be taken up by the respective State.

For the remaining half, distribution utilities would get three-year moratorium on principal payment.

In the second phase, the Government expects the distribution utilities to become cash-surplus. Thereby the remaining debt would be restructured for seven years.

These bonds would not be traded like other securities. Only the respective lenders to the Discoms will buy these bonds.

The State Government will bear the interest, which will get transferred to the State account as per Fiscal Responsibility and Budget Management Act.

(This article was published on April 5, 2013)
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