New Delhi: The Power Ministry has convened a meeting of state energy ministers on February 5 primarily to seek their support for its financial restructuring plan to bailout ailing electricity distribution companies.
"They (states) have been called on February 5 to participate in the government's initiative of providing a financial restructuring package for their discoms," a Power Ministry official said, adding that Power Minister Jyotiraditya Scindia would chair the meeting.
Last year, the government announced restructuring the Rs 1.9 lakh crore debt (as on March 31, 2011) of nearly-bankrupt power distribution companies in an attempt to improve their financial health.
According to the proposal, 50 percent of the outstanding liabilities of the discoms would be taken over by the states.
Remaining 50 percent loans would be restructured by providing moratorium on principal and best possible terms for repayments.
The debt will be first converted into bonds to be issued by discoms to the participating lenders and it (bond issue) would be backed by state governments.
The scheme, however, is yet to be notified.
"The timeline for the states' response has now been extended to March 31, 2013," the official said.
Under the scheme, the support will be available for all participating state-owned discoms on fulfilling short-term mandatory conditions.
The restructuring of loans is to be accompanied by concrete actions by discoms or states to improve operational performance of the electricity distribution utilities.
The scheme also stated that the takeover of debt by the states from discoms in the next 2-5 years by way of special securities and repayment and interest payment should be done by them (states) till the date of takeover.
The approved scheme is formulated based on report of expert group headed by B K Chaturvedi, Member (Energy) Planning Commission and deliberations in the PMO (Prime Minister's Office) and Finance Ministry.