The banking sector as a whole has a huge exposure to the near bankrupt state-run discoms to the tune of Rs 4.3 trillion in principle alone and over Rs 5 trillion if interest and unpaid dues are counted.
Union Power Minister Piyush Goyal said the implementation of the revival package of the near bankrupt state-run discoms will result in total savings of nearly USD 30 billion by FY 2018-19.
“If all goes as planned, the Uday scheme (the nomenclature of the revival package involving taking away the Rs 4.3 trillion debt of the discoms’ books), will help save nearly USD 30 billion in total by FY15,” Goyal told investors here this evening.
The banking sector as a whole has a huge exposure to the near bankrupt state-run discoms to the tune of Rs 4.3 trillion in principle alone and over Rs 5 trillion if interest and unpaid dues are counted.
These discoms have accumulated losses of about Rs 3.8 trillion. Goyal assured that the state-run Power Finance Corporation and Rural Electrification Corporation, which have an exposure of around USD 20 billion to the discoms, will not be forced to buy the bonds to be issued by the respective states under the scheme at 8.8.5 percent yield.
He also said this is aimed at protecting the balance sheet of PFC, which gets loans at 7.5 to 8 percent. “We will not stress PFC and REC’s balance sheets with these bonds which will be priced at 8-8.5 percent. It could only affect their working capital requirement,” he said, adding this is the reason why the government will be selling these bonds in the market.
Claiming that there is a huge appetite in the market for such bonds as the renewable and transmission sectors are doing well, the minister said he has already spoken to pension funds, provident funds and insurers.
He said once the scheme is implemented PFC and REC can unlock their USD 20 billion exposure and invest further in projects. “I believe they (PFC and REC) can even expand their loan book in the next two to three years. Both can fund up to USD 60 billion in the next five years in fresh investment,” Goyal said.
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