Steps by Government to improve financial and operational efficiencies of DISCOMs – EQ Mag Pro
The Government of India has made several interventions to improve financial and operational efficiencies of DISCOMs linked to reform measures including Liquidity Infusion Scheme (LIS); Additional Borrowing of 0.5% of GSDP to States linked to power sector reforms; introducing additional prudential norms for lending by Power Finance Corporation (PFC) Limited and REC Limited; and Revamped Distribution Sector Scheme (RDSS).
Fund admissibility to States and DISCOMs in all these measures will be conditional on their taking steps to improve their operational and financial efficiencies.
Further, the Government had also issued an order dated 28th June, 2019 enforcing opening and maintaining of adequate Letter of Credit (LC) as payment security mechanism under Power Purchase Agreements (PPAs) by Distribution Licensees. The order mandates NLDC & RLDC to dispatch power only after confirming opening of LC. These reform measures will improve the financial health of DISCOMs which will improve the liquidity situation leading to reduction in outstanding dues to Power Generating companies (GENCOS).
Furthermore, all the Distribution Companies are continuously pursued by the Generating Companies and Inter State Transmission licensee for payment of outstanding dues. In case of default, notices for regulation of power supply are served and Tripartite Agreement between Reserve Bank of India (RBI) and State Government is also invoked for recovery of dues.
This information was given by Shri R.K Singh, Union Minister for Power and New and Renewable Energy in a written reply in Rajya Sabha today.