Narendra Modi tries to help debt-hit distribution companies

New Delhi: Prime Minister Narendra Modi on Monday met the top brass of power utilities, particularly electricity distribution companies (discoms), to review their performance and discuss the issue of their burgeoning debt.

“The Prime Minister had met this morning with officials of power utilities, especially discoms, to take stock of their performance and the issue of increasing debt of discoms,” a source said.

The combined debt of power distribution companies (discoms) stands at over Rs 3 lakh crore. Faced with acute financial stress, many of these are unable to buy power. The speculation is rife that the government is working out a bailout package for the debt-ridden discoms, so that the government can achieve the goal of providing power to all.

However, power minister Piyush Goyal had ruled out any financial package for the discoms, saying the government of India cannot be considered as “a bailout bank” and the states would have to find the solution.

“Some states have serious crisis (power) looming large. But at the end of the day, the government of India can only facilitate the turnaround of these discoms. And we cannot finance it,” he had said.

On extension of the financial restructuring package (FRP), the minister had said, “The government has not finalised any such extension of the old plan.” Originally introduced in April 2012, the three-year long FRP was implemented in October 2013.

In an attempt to restore power-purchasing capacity of the debt-heavy discoms and enable banks to recover their loans, the Cabinet Committee on Economic Affairs had approved the scheme for financial restructuring of the state discoms in September 2012.