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Government Relaxes Working Capital Norms For Power Distribution Firms

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Government Relaxes Working Capital Norms For Power Distribution Firms

The authorities on Wednesday permitted a proposal to offer one-time leisure in working capital restrict norm for energy distribution firms (discoms) below the Ujwal DISCOM Assurance Yojana (UDAY) to get loans as a part of the Rs 90,000 crore liquidity infusion scheme. Addressing the media after the cupboard assembly chaired by Prime Minister Narendra Modi, Union Minister Prakash Javadekar mentioned, “Power sector has problems. The bills are not being collected by them. PFC and REC have been allowed to give loans above the limit more the 25 per cent working capital limit. This will increase liquidity of the state discoms”.

“The working capital limit is 25 per cent of last year’s revenue. Now, the limit is relaxed,” Mr Javadekar mentioned.

According to an official assertion, the Cabinet Committee on Economic Affairs permitted a one-time leisure to Power Finance Corporation (PFC) and REC Ltd for extending loans to discoms above limits of working capital cap of 25 per cent of final yr’s revenues below UDAY.

One-time leisure will assist in offering liquidity to the ability sector and guarantee funds by discoms, it added. The COVID-19 outbreak and nationwide lockdown have exacerbated liquidity issues for the ability sector.

Revenue of the ability distribution firms has nosedived as persons are unable to pay for the electrical energy consumed, whereas energy provides, being a vital service, have been maintained.

Energy consumption has decreased considerably. The liquidity of the ability sector just isn’t anticipated to enhance within the brief time period, as financial exercise and energy demand will take a while to select up. There is, thus, a right away have to infuse liquidity within the energy sector for the continuation of energy provide, it added.

Finance Minister Nirmala Sitharaman had in May introduced the Rs 90,000 crore liquidity infusion into cash-strapped discoms, dealing with demand hunch as a result of lockdown to comprise COVID-19. However, a few of the discoms weren’t eligible for getting loans below the package deal as a result of they weren’t assembly working capital restrict norm below the UDAY scheme.

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