Don’t Grant Loans to Huge Loss Making Discoms, says RK Singh to REC, PFC

He said that many distribution companies have been making heavy transmission and distribution (T&D) losses and it may be difficult for them to repay the loans.

In a review meeting, the Union Minister of State (IC) Power and New & Renewable Energy, R K Singh has directed the two financing arms of the Power Ministry i.e. Rural Electrification Corporation (REC) and Power Finance Corporation (PFC) not to grant any loan to distribuition companies (discoms) which are making heavy losses, unless they draw up a road map for reducing the losses.

Singh instructed that discoms which are making heavy losses (above 15 per cent) will not be granted any loans for capital expenditure or non-capital expenditure until and unless they draw up a road map for reducing the losses over a definite time frame (not more than 2 years), and they are able to show that they are taking action in accordance with the road map.

This will be vetted by the Ministry of Power and only then will the grant of loan be considered for such discoms.

The Union Minister has directed REC and PFC that before granting of loan either for capital expenditure or for non-capital expenditure, the adherence to prudential norms must be carefully observed.

He said that many distribution companies have been making heavy transmission and distribution (T&D) losses and it may be difficult for them to repay the loans.