Rs 1.5 lakh crore loan recast for power distribution companie

Sidhartha, TNN | Jun 9, 2012, 05.48AM

NEW DELHI: In one of the biggest-ever restructuring exercise, the Centre has agreed to a loan relief for ailing power distribution companies (discoms) but is insisting that state governments and the utilities take over the entire burden of Rs 1.5 lakh crore, instead of banks taking over half the liability.

With the latest recast, the government has taken total loan restructuring to near Rs 2 lakh crore over the last two months, including Rs 35,000 debt relief for textile mills and Rs 18,000 crore for ailing Air India, with demand from several others, including private airlines, pending with lenders. Separately, banks have been restructuring loans of private players either on their own or through the corporate debt restructuring mechanism where a record number of proposals are being filed. Banks have also seen a rise in non-performing assets due to lingering global economic woes and a slowdown in the country.

A decision to restructure the power sector liabilities was taken at a meeting at the Prime Minister's Office on Wednesday, which will result in state governments issuing bonds of about Rs 1.5 lakh crore along with the discoms. While the final package will be finalized by the Union Cabinet by June-end, sources said it will not be in line with the recommendations of a committee headed by Planning Commission member B K Chaturvedi that had suggested that the burden be split between the states and lenders, which were asked to provide a moratorium on interest payment.