With sanctions totalling Rs.1.14 trillion and application for a further Rs.157 billion (under UDAY limit relaxation) by Chhattisgarh, Jharkhand and Uttar Pradesh, the total applications under the PFC/REC Aatmanirbhar Scheme to infuse liquidity into discoms touch Rs.1.3 trillion, a study by ICICI Securities (I-Sec) has said.
Of this, Rs.311.4 billion has already been disbursed to several states. UDAY limit relaxation has allowed states to borrow more and, apart from the mentioned states, others including Maharashtra, Himachal Pradesh, etc. have also availed of the benefit.
Given that SEBs are comfortable with the conditions, further disbursals, including the second tranche, are expected in the next 3-4 months. This will significantly help ease the sector’s receivables concerns (overdues reached Rs1.22 trillion in Aug 2020) in the next few months, particularly of the CPSEs.
Till October 28, 2020, the PFC/REC Aatmanirbhar scheme to infuse liquidity into discoms received interest totaling Rs.1.3 trillion, of which Rs.1.14 trillion has already been sanctioned and Rs.157 billion under UDAY limit relaxation are in process. Total disbursals till date stand at Rs.311.4 billion.
Tamil Nadu government has approved guarantee and budgetary support for repayment of Rs.302.3 billion loan to be taken under the scheme (already sanctioned). The state’s finance department has issued orders for unconditional and irrevocable government guarantee and commitment letters for the proposed loan. This is the biggest loan application by a state, about one-fourth of the total scheme size. Given that SEBs are comfortable with the conditions, we expect the time lag for second tranche to be less than 3-4 months.
Government of India has already relaxed the working capital limits of states to go beyond 25 per cent of past year’s revenues, as prescribed under UDAY. Under UDAY limit relaxation, the latest sanction received is by Maharashtra for an additional Rs.46.6 billion (which may double to Rs.93.1 billion after PFC sanctions) and several states have shown their interest to avail of this benefit.
I-Sec believes that further disbursements under the package will channelise liquidity into the value chain by clearing dues of CPSUs and IPPs, easing systemic stress further. As per the Praapti portal, discom overdues reached Rs.1.22 trillion in August 2020, with overdue to NTPC at Rs.194 billion. Further, as per the coal ministry, outstanding dues payable by power companies to CIL reached Rs.221.3 billion in Sep 2020. Thus, CPSUs will be among the largest beneficiaries.
Source: Research report by ICICI Securities (I-Sec)
Featured photograph courtesy Tata Power DDL.
