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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India’s power distribution companies (discoms) could get a lifeline as early as this week.
Sources tell CNBC-TV18 the Cabinet will take up a proposal to restructure their debt this Thursday, adding that the headroom under the Fiscal Responsibility and Budget Management (FRBM) scheme will be put to use and old loans will be converted into bonds.
This move could reduce interest costs by alteast 3 to 5 percent and interest outgo will come down by as much as Rs 15,000 crore per annum.
Below is the verbatim transcript of Piyush Goyal’s interview with Anshu Sharma on CNBC-TV18.
Q: How different will the discom resolution will be this time from 2012?
A: The final resolution is a collective effort of all stakeholders. The states are on board, the coal companies, the power generating units, transmission companies, all have worked together to find a permanent resolution. The big difference between the past and now is that (a) it is not foisted on the states on the top (b) it is not driven by subsidies.
It is not as if we are doling out or promising to dole out money but it is about handholding the states, it is about empowering them to be able to give electricity to everybody in their state 24/7. It is about helping them with technology, helping them to upgrade their transmission and distribution systems. So this time around it’s a completely new programme. We are also looking at it in the long run to make sure that in the future there is no incentive to keep these discoms in losses and I am confident that given the bipartisan support of all parties towards this programme, it strengthens my resolve to be able to give 24/7 power to everybody in this country.
Q: You have spoken that tariff increase is not the only way out for Discom resolution. You have spoken about monitoring all the centrally bad schemes. So how soon, how much time will it take for all the seven-eight states to come out of their debts?
A: Some of them will get out of annual losses in 12 to 18 months. It will depend from state to state. However, from the Centre, some of our officials are sitting down with the state government team in a partnership model. We are not micro managing their work but we are helping them evolve their own project plans for the next three-four years. Come 2019, I feel India will have zero loss of the discoms on an annual basis.
Q: In October 2012, the fair and remunerative price (FRP) was approved. The Cabinet is yet to take a nod on this discom resolution. How soon can we expect Cabinet to meet on this?
A: Let’s leave some of those decisions for the Cabinet Secretary to decide.
Q: What do you have to say about the national solar mission plan? We understand that the bid is around Rs 4.8. Is that viable and how much interest do you see coming in future?
A: I am delighted that the solar prices are coming down to levels which are very reasonable, in fact very close to grid parity now. I had always believed in that and I said it to you on your channel so many times and I believe that with economies of scale and with transparent and honest process of procuring this power, just like the light-emitting diode (LED) programme was a resounding success and we were able to bring down prices to Rs 72 against Rs 310 one year ago, similarly in solar power we have been able to substantially bring down prices.
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The government buys rice and wheat from local growers to build a buffer for any emergency and to run its mammoth food welfare progammes. The state purchase also protects farmers from distress sale.
India has raised the price that the government will pay to buy new-season wheat from local farmers to 1,525 rupees per 100 kg, up from 1,450 rupees in 2015, Power Minister Piyush Goyal said.
The government buys rice and wheat from local growers to build a buffer for any emergency and to run its mammoth food welfare progammes. The state purchase also protects farmers from distress sale. Indian farmers grow only one wheat crop in a year. Planting starts in October, with harvests from March.
The government also raised the purchase price of rapeseed, the main winter oilseed, to 3,350 rupees per 100 kg against 3,100 rupees last year, Goyal told reporters on Thursday.
The price of chickpea, the main pulse, has been raised by 7.9 percent to 3,425 rupees per 100 kg, he said, adding, the government would ask state-run agencies to procure oilseeds and pulses in an attempt to protect farmers from distress sale.
Shri Piyush Goyal, Union Minister of State (IC) for Power, Coal and New & Renewable Energy presided over the review meetings of Bhakra Beas Management Board (BBMB) and National Hydro Power Corporation (NHPC) in Chandigarh today. In his presidential address, Shri Piyush Goyal called upon the managements of both the public sector bodies to increase their efficiency and their capacity to the highest level and appealed the state governments of Punjab, Haryana, Rajasthan and Himachal Pradesh to forget and sink their differences for the overall development of the people of the region. The Minister said that a joint meeting of Chief Ministers of all these four states will be held shortly at Chandigarh to sort out the long pending issues, for the benefit of the people of these states.
He also directed BBMB Chairman to submit an action plan to him within a month for constituting some rapid action force for approval to strengthen the public warning system to avoid accidents by immediate release of water from dams. It will be adopted for every hydro plant in the country in a time bound manner. Union Minister directed that his instructions to start E-Bidding process be followed in letter and spirit.
Shri Piyush Goyal also directed the BBMB to make an inventory of all its assets, including its unused vacant land within 6 months.
Shri SK Sharma, Chairman BBMB and Shri KM Singh, Chairman cum Managing Director NHPC, briefed the Union Minister on their activities and performance. It was informed in the meeting that 17 government to government cases are pending in different courts, regarding water sharing and related issues. Senior officers of Union Ministries of Power and Water Resources, Concerned senior officers from the states of Punjab, Haryana, Himachal Pradesh and Rajasthan, senior officers of BBMB and NHPC attended the review meetings.
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Kolkata: The Coal Ministry today stressed upon meeting the production target of 550 million tonne for the current fiscal by mining major Coal India.
“In the first half coal production growth was nine per cent. The target is to cross 550 million tonne by March. I wish by March 31, Coal India chairman sends me a message that we have crossed the target,” Union Coal Minister Piyush Goyal said here today.
Goyal was attending the 41st Coal India foundation day ceremony here.
The Minister was confident about Coal India’s achieving the target and hoped the PSU would produce one billion tonne of coal by 2019-20.
Goyal said coal imports were coming down and in September imports were down significantly, but did’t give any number.
“I hope in two years there will be no imports, particularly for thermal coal,” he said.
Coal India chairman Suthirtha Bhattacharya said they were aiming to make Coal India a people’s brand.
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WASHINGTON: Ahead of next month’s Paris summit on climate change, India has underlined the need for long term low-cost funding to keep energy cost affordable considering the development needs of its fast growing economy.
Participating in a panel discussion on ‘Unlocking Investment in Developing Countries’ at the State Department in Washington, Energy Minister Piyush Goyal said in the next five to six years, India needs huge capital investment around USD 250 billion to meet its renewable energy goals.
“In order to sustain the process of environment friendly economic development in the long run, development of new and renewable sources of energy acquires utmost importance for India,” he said.
He “emphasised the need for long term low cost funding to keep energy cost affordable considering the development imperatives of India’s fast growing economy.”
The Minister is here at the invitation of Secretary of State John Kerry to participate in the Climate and Clean Energy Investment Forum 2015.
Observing that India’s renewable energy potential is vast and holds a great promise, he said it provides ample opportunities for trade and investment to set up manufacturing, leapfrog technologies and create volumes.
The discussion was moderated by Michael Liebreich, Bloomberg New Energy Finance and the other panelist was Amos Hochstein, Special US Envoy and Coordinator for International Energy Affairs.
Mr Goyal underlined India’s commitment to pursuing a green path to growth through its plans for deployment of 175 GW of renewable power capacity by 2022, including 100 GW of solar and 60 GW of wind power, a media release said. Yesterday, Mr Goyal met Mr Kerry.
During his meeting with Kerry and other US officials, the two sides acknowledged a major positive shift in the trajectory of US-India relations and committed to explore new opportunities for co-operation.
The US officials appreciated India’s efforts to promote new and renewable energy sources and India’s commitment towards climate and clean energy.
At the State Department, Mr Goyal spoke about India’s concerted efforts to introduce new means of financing and innovative financial instruments that can leverage greater investments and broaden the investor base.
He outlined the steps being taken to improve the contractual/ counter-party risk framework which is critical to all investors; unlocking investment from domestic banking and capital markets; and significantly scaling of international capital flows.
Mr Goyal spoke about initiatives such as Greening the Grid; National Solar Mission: LED Programme for enhancing energy efficiency etc.
He also announced that a fund focusing on renewable energy within the National Infrastructure Investment Fund is under active consideration of the Government.
He reaffirmed India’s commitment to take all necessary steps to create a conducive environment for promoting investment in the renewable energy sector and strengthening the regulatory and institutional framework.
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New Delhi: The issue of burgeoning debt of power distribution companies will be sorted out soon as everybody is on board to resolve it, Power Minister Piyush Goyal said on Friday.
“Everybody is on board that discoms (issues) are going to be sorted out soon,” Mr Goyal said after many rounds of meetings with distribution companies and bankers here in the Capital.
Hit by subsidised tariffs, state electricity discoms are facing cash crunch and are incurring annual losses of about Rs 60,000 crore. This is also affecting public sector banks as their bad loans are rising.
The Centre is working on recast debt of power distribution companies and a proposal in this regard is expected to be tabled before the Union Cabinet this month.
The government wants to draw a long lasting financial restructuring plan that would provide incentives to discoms to generate more revenue.
“Under the debt recast plan, the discoms will get some relief by way of reducing interest rate. That could be reduced from 11-12 per cent to 7-8 per cent. Besides the repayment tenure could be stretched,” a senior official of discom who attended the meeting on Friday said.
The Union Cabinet is expected to soon consider a proposal to recast over Rs 3 lakh crore loans of power distribution companies with a view to bring down their liabilities.
NEW DELHI: India does not need to shoulder the responsibility of carbon cuts going by the “polluters pay” principal, but has respect for environment and is doing its share, Power, Coal, New and Renewable Energy Minister Piyush Goyal said today.
“By the ‘polluters pay’ principal, India does not need to shoulder the responsibility,” Mr Goyal said during an interaction with journalists at Indian Women Press Corps.
“But India does not shy away from its responsibility… People in India have always respected environment. We respect nature as god,” he said.
Comparing India with the US, he said in the latter, power is wasted as buildings are lit all night.
“In the US, you can see from your hotel window…. tall buildings lit brightly all night. If you have a telescope you can even what is written on the papers kept in the rooms.
“In India we do not waste energy,” he said.
The Minister also said that the central government is working actively with states to resolve power issues in the country.
He said he has been getting good response from the states and regular meetings are taking place.
About coal supply to power plants, Goyal said when the NDA government came to power, there was a major crisis.
“When we came, coal was a burning issue. Today there is enough coal for every plant,” he said.
“In two years, coal import for thermal plants will be zero,” he said.
The Minister said a network of train, and water ways is being developed to ensure uninterrupted coal supply to power plants.
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