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CCEA approves amendments in financial restructuring scheme of discoms

29 Nov 2013 Evaluate

The Cabinet Committee on Economic Affairs (CCEA) has approved amendments in financial restructuring scheme of State power distribution companies in Jharkhand, Bihar and Andhra Pradesh, which are facing financial difficulties. Meanwhile, the scheme is already implemented in various states include Tamil Nadu, Rajasthan, Uttar Pradesh, Haryana and Himachal Pradesh.

Power utilities of Bihar, Jharkhand and Andhra Pradesh were interested to participate in the scheme, but could not do so because of their unavailability in meeting certain requirements of the restructuring scheme. Meanwhile, in order to enable these three states power companies to participate in the scheme for issuance of bonds/reschedulement by lenders, the government has extended the cut-off date for reckoning the eligible amount of short-term liabilities to March 31, 2013 from March 31, 2012. The scheme will be available to these states up to 31 December 2013.

Earlier, in September, the power ministry has also moved a draft note to CCEA with a proposal of about Rs 11,000 crore payout to subsidise costlier power. India’s total installed power generation capacity is 225,793 MW, of which 18,714 MW or nearly 8 percent, is gas-based. Under the new approved pricing formula, the gas prices will increase to $8.40 per million British thermal unit from the current price at $ 4.20 per mbtu, leading to cost of electricity generation of Rs 10.47 per unit. The power ministry has argued that consumers cannot absorb such a high cost of electricity and so the government should subsidise any cost over and above Rs 5.50 per unit to power utilities.

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