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The Cabinet Committee on Economic Affairs on Wednesday approved a one-time relaxation to Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) for extending loans to state-run electricity distribution companies (discoms), above their working capital limits under the Ujwal DISCOM Assurance Yojana, or UDAY.<\/p>\n
The decision comes against the backdrop of some discoms being unable to avail the Rs1.25 lakh crore reform-linked loan package for clearing dues. With some fund-starved discoms neither having the headroom for borrowing more working capital, nor the requisite state receivables to clear their dues, the power ministry had circulated a cabinet note seeking a one-time exemption on working capital limits placed under UDAY, Mint reported on July 28.<\/p>\n
\u201cCCEA approves one-time relaxation to PFC and REC for extending loans to discoms above limits of working capital cap of 25% of last year\u2019s revenues under UDAY,\u201d the government\u2019s principal spokesperson said in a tweet.<\/p>\n
As part of its stimulus package to bring the economy back on track after the Covid-19 lockdown, the government announced this liquidity injection for discoms as part of the Atmanirbhar Bharat Abhiyan, backed by state governments\u2019 guarantees.<\/p>\n
The money is to be raised by state-owned Power Finance Corporation and Rural Electrification Corporation from the market against the receivables of discoms.<\/p>\n
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