The Cabinet Committee on Economic Affairs is likely to consider the proposal to restructure Rs 2 lakh crore worth debt of power distribution companies next week.
New Delhi: The Cabinet Committee on Economic Affairs is likely to consider the proposal to restructure Rs 2 lakh crore worth debt of power distribution companies next week.
Majority of the power distribution companies (discoms) are grappling with huge losses, a scenario that has sparked off concerns of possible loan defaults in the banking system.
Sources said the restructuring of discoms's debt worth around Rs 2 lakh crore could be considered by the Cabinet Committee on Economic Affairs (CCEA) next week.
The proposal was listed on the agenda of CCEA meeting, which was earlier scheduled for tomorrow. Now, it has been postponed to next week, sources said.
The plan for restructuring the debt of discoms has been in the works for sometime now. The Power Ministry had earlier floated a Cabinet note on the issue and reportedly due to some reservations expressed by the Finance Ministry it had to rework the proposal.
About Rs 2 lakh crore worth debt is likely to be restructured and as per earlier plan, half of the amount was to be converted into state-government bonds. There could also be plans to ensure that regular tariff revision takes place.
Banks and financial institutions are estimated to have an exposure of over Rs 1 lakh crore to various power discoms.
Last week, Minister of State for Power K C Venugopal had said the Ministry has moved a revised Cabinet note on the proposal for restructuring the debt of discoms.
Lower realisation of tariffs and high Aggregate Technical and Commercial (AT&C) losses have been mainly blamed for the precarious health of discoms.
However, the situation is expected to improve in the coming years as many of the discoms have either or are in the process of hiking electricity tariffs.
Last year, the high level Shunglu panel had pegged the accumulated loss of discoms at Rs 82,000 crore during 2006-10 period. The committee, set up by the Planning Commission, had looked into the financial health of discoms.