Power Min to discoms' rescue: May lower interest rates

The power ministry is considering extending moratorium by five years on loans that power companies have viz-a-viz banks under the financial restructuring plan (FRP). The government may also ask states to issue more bonds in lieu of discoms debt and try and bring down interest rates to 8 percent from 12 percent, sources say. The ministry is worried about the financial health of these discoms.

But a final decision will be a taken after a committee report on financial viability of discoms, power ministry sources adds.

The current plan for FRP ends in FY16.

Meanwhile, states have also asked for some favours from the Central government which includes the Centre providing funds for interest subsidy on loans of over Rs 40,000 crore. States such as Tamil Nadu, Rajasthan, Uttar Pradesh and Haryana have also asked for five-year extension of cash-cap funding which was taken care of by the Central government under the provisions of FRP.