Discoms paying power cos after debt recast, OBC confirms

After media reports suggested that the UP State Electricity Board (SEB) had recast its loans, CNBC-TV18 spoke to Oriental Bank of Commerce Chairman SL Bansal -- one of the bankers who is part of the consortium -- who confirmed the news.

Also read: UP discoms have cleared dues completely: PTC India Bansal said disbursements towards SEBs had started taking place after the discoms started paying regular interest and placed bonds with them, in a sign that cash flows for the SEBs, and consequently power companies, may now be improving. Here is the transcript of the interview. Q: There is a detailed breakup in one of the newspapers that the Uttar Pradesh SEB has recast its loans and has got Rs 11,000 crore either from the state government or banks and it has paid its dues to firms from which it bought power: NTPC, PTC, Power Grid, etc. Can you confirm this news? Is the health of power discoms improving? A: We have signed a financial restructuring plan (FRP) with all the three state discoms: Haryana, Rajasthan and Uttar Pradesh. Bonds have been issued and we have started disbursing money. We signed the FRP on September 25 and UP was the first to receive disbursement from most banks (who are part of the consortium). So the news is correct. Discoms have started making payments (after the recast) and the health of the companies should improve. Q: Can you remember how much would be the money received by Rajasthan and Haryana as well. What is the package? A: Fifty percent of the loans as of March 31, 2012 will be converted into bonds and will be released. 100 percent of losses for March ’13 and going forward 75 percent and 50 percent (will be released). Q: What is the total amount of money involved? It is Rs 11,000 crore for UP. What is it for Rajasthan and Haryana, so we could get an idea of how much dues may be paid to downstream companies? A: I do not have the exact number at present as to how much Haryana and Rajasthan have got. I can talk only for OBC. Bonds to the extent of Rs 800 crore have been issued and we will be releasing close to Rs 1,200 crore to Rajasthan in phases and Rs 1,100 core to Haryana depending upon our share of in the consortium. All this will translate into close to Rs 10,000-11,000 crore for each discom. This is a good sign because now the ball is in the state governments’ court. They can successively increase the tariff, which has been outlined in the FRP. So going forward, there will likely not be much of problems.