Six states agree to debt recast plan of discoms: Scindia

Power Minister Jyotiraditya Scindia has said that as many as six states have come forward for the government's ambitious financial rejig plan of the state discoms.

"Bihar, Andhra Pradesh, Uttar Pradesh, Tamil Nadu, Kerala and Haryana have agreed to the debt recast plan," Scindia told reporters in New Delhi on Thursday.

He also said the government is hopeful of executing the power distribution companies' debt restructuring soon.

Faced with mounting debts of power distribution companies (discoms), which is over Rs 2.46 lakh crore (as on March 2012), the government, in October last year, came up with financial restructuring plan.

Centre would recast Rs 1.5 lakh crore debt of the state electricity boards. Taking over of 50 percent short-term liabilities of discoms by respective state governments is a major proposal in the Central government plan.

Incentives such as re-reimbursement of 25 percent of discom debt taken over by the state government are part of the scheme.

However, the Power Ministry has not given specifics regarding re-reimbursement of debt burden to the states.

As per the financial restructuring plan, central government would provide 25 percent capital reimbursement of principal repayment by the respective state government on the liability taken over by it.

Under the scheme for state-owned discoms, the respective state government is to take over 50 percent of the outstanding short-term liabilities up to 31^st March 2012.

According to the plan this shall be first converted into bonds to be issued by discoms to participating lenders, duly backed by State Government guarantee.

"Takeover of liability by state government from discoms in the next 2-5 years by way of special securities and repayment and interest payment to be done by the state government till the date of takeover," according to the plan.

The last date for the states to register for the recast plan may be extended from the current 31^st March.