The Tamil Nadu Generation and Distribution Corporation Limited (Tangedco) has sought ₹30,000 crore as part of the Centre’s ₹90,000 crore liquidity injection package for State distribution companies.
It will be able to avail loans from the Power Finance Corporation (PFC) and the Rural Electrification Corporation (REC), after the Cabinet Committee on Economic Affairs on Wednesday allowed a one-time relaxation in working capital lending limits.
As per the Ujwal DISCOM Assurance Yojana (UDAY) norms, banks and financial institutions can lend only 25% of a distribution company’s revenue in the previous year for working capital. Now, the Cabinet has allowed the two financial institutions to lend above the 25% cap.
Tangedco sources said an official communication was awaited, and they would know the amount they would be granted and other terms and conditions once the sanction letter is issued by the institutions.
Outstanding dues
As of June, Tamil Nadu had outstanding dues of ₹18,077 crore to power generators, the second highest after Rajasthan. The Centre had announced the ₹90,000-crore-package in the form of State guaranteed loans (to be equally funded by the PFC and the REC).
These loans will provide relief to the stressed State distribution companies and enable them to clear outstanding dues to power generators and transmission companies. It would also help in restarting the cash-flow cycle of the power sector to an extent, according to CARE Ratings.
The PFC and the REC have sanctioned over ₹30,000 crore each as part of the liquidity package to distribution companies till July 31, 2020.
