The government is considering a Rs 90,000 crore low-cost finance infusion plan for the cash-strapped power sector as generation companies (gencos) seek cash amid the country-wide coronavirus lockdown. The aim is to keep gencos up and running and preventing blackouts.
For this, the power ministry has sought a special window for bonds and also approached agencies like the Employees’ Provident Fund Organisation (EPFO), Life Insurance Corporation (LIC) of India and National Small Savings Fund (NSSF) for funding, The Economic Times reported.
The proposal is under consideration by the Finance Ministry, but the final draft would require Cabinet approval, a government official told the paper.
Moneycontrol could not independently verify the report.
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The loans would be made available to the Power Finance Corporation (PFC) and REC – the sector’s lending institutions. To this end, the ministry has asked for consideration of relaxation of exposure norms so that banks and financial institutions can freely lend to PFC and REC. The entities will forward the benefit to electricity distribution companies (discoms), it added.
“The scheme needs access to cheap funds for which it needs support of the finance ministry. We are hoping it will happen soon. It is a big amount and hence everyone needs to be on board,” the official added.