Punjab, UP, Rajasthan, evince interest in taking loans to pay gencos: New PFC CMD

Punjab, Uttar Pradesh, Rajasthan, Manipur and Karnataka have evinced interest to avail loans under the Centre’s Rs 90,000 crore liquidity infusion package, Power Finance Corp (PFC) chairman and managing director Ravinder Singh Dhillon said on Monday adding the Corona virus pandemic posed significant business challenges.
The company needs to explore new areas of financing such as charging infrastructure and electric vehicles, renewable energy sources with substantial storage and make efforts to tap business from good business houses, , Dhillon who took charge of PFC on Monday said.

“Apart from affecting our social life, the outbreak of this pandemic and the consequent nation-wide lockdown has also created an unprecedented economic disruption. We are uncertain on how prolonged this situation will be. We all are therefore in an uncharted territory, facing significant and unique business challenges, which we had never imagined. With all these challenges, PFC is clearly at cross roads,” he said.

Dhillon lauded PFC’s response to the pandemic. “We have all stood together and fought against all odds to make 11,000 Crs disbursement possible in the last 3 days of the FY despite the lockdown. We have also brought out a moratorium policy and liquidity package to help the power sector during these testing times,” he said during his first interaction with the employees.

ET had on Monday said PFC and REC Ltd have decided to offer 10-year loans to state distribution utilities at 9.5% for the next 60 days under the Rs 90,000 crore liquidity infusion package while the government is considering relaxing working capital borrowing limits of power distribution companies. The package proposes loans from the two lenders to discoms to help them pay there pending power bills.

Sources said the government is considering relaxing the working capital borrowing limit to the extent required for borrowing under the liquidity in fusion scheme, subject to a maximum of 35%-40% of a discom’s previous year’s revenue.

Currently, banks and financial institutions can lend only 25% of a discom’s revenue in the previous year as working capital. This restriction was imposed after clearance by the Union Cabinet at the time of Ujwal Discom Assurance Yojna (Uday) scheme.

A senior government official said that PFC and REC have fixed interest rates under the liquidity package at 8.75% for three-year loans, 9% for five year loans, 9.25% for seven years and 9.5% for 10-year term loans. The interest rates will be valid for the next 60 days.

Electricity distribution companies of 8-9 states including Maharashtra for, Telengana, Andhra Pradesh, Uttar Pradesh, Meghalaya, Jammu & Kashmir and Tamil Nadu have expressed interest in borrowing the loans from PFC and REC for about Rs 60,000 crore loans and are likely to complete documentation in 7-10 days, he said.