Centre relaxes norms for PFC, REC to lend to discoms


To supply liquidity to the ability sector, the Cupboard Committee on Financial Affairs on Wednesday accredited a one-time rest to Energy Finance Company and Rural Electrification Company for extending loans to distribution corporations (discoms) above the boundaries of working capital cap of 25% of final yr’s revenues.

“Presently, the ability sector is going through issues… as a result of COVID-19, the consumption of electrical energy has fallen… and payments aren’t being paid on time. State discoms are going through points, so to assist them PFC and REC have been allowed to provide loans above the restrict extra the 25% working capital restrict,” Union Minister Prakash Javdekar mentioned in a briefing. The federal government mentioned the one-time rest will assist present liquidity to the ability sector and guarantee funds by States to discoms. An official assertion famous that the outbreak of COVID-19 and the ensuing lockdown had exacerbated liquidity issues for the ability sector.

“Revenues of energy distribution corporations have nosedived as persons are unable to pay for the electrical energy consumed whereas energy provides…. have been maintained,” it mentioned, including that the vitality consumption has decreased considerably.

Energy sector liquidity just isn’t anticipated to enhance within the brief time period, as financial exercise and energy demand will take a while to choose up. There may be, thus, an instantaneous have to infuse liquidity within the sector for continuedpower provide, it added.

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