The Cabinet Committee on Economic Affairs (CCEA) today approved the scheme for financial restructuring of state electricity distribution companies (discoms) in order to turn around these power sector utilities.
The scheme contains various measures required to be taken by state discoms and state governments for achieving the financial turnaround of the discoms by restructuring their debt with support through a transitional finance mechanism by the central government.
The scheme is effective as soon as notified and will remain open up to 31 December 2012 unless extended by the central government, an official release said today.
Central government support for the scheme will be available for all participating state-owned discoms on fulfilling certain mandatory conditions.
The central government, however, wants the state government to take over 50 per cent of the outstanding short-term liabilities of discoms up to 31 March 2012. This should be first converted into bonds to be issued by discoms to participating lenders, duly backed by state governments guarantee.
State governments should also take over liability from discoms in the next 2-5 years by way of special securities and repayment and interest payment to be done by state governments till the date of takeover.