Power minister asks REC, PFC to stop lending to loss-making discoms

The power ministry has asked the two state-run power sector financiers Power Finance Corp and Rural Electrification Corp to be cautious in lending to power distribution companies that have high distribution losses making it difficult for them to repay the loans.

Power minister RK Singh on Wednesday took a review of the institutions and directed them to exercise prudential norms before granting of loan either for capital expenditure or for non-capital expenditure, an official statement said.

“The minister directed that discoms, which are making losses above 15 per cent, will not be granted any loans for capital expenditure or non-capital expenditure until and unless they draw up a road map for reducing the losses over a definite time frame-- not more than two years, and are able to show that they are taking action in accordance with the road map. This will be vetted by the ministry of power and only then will the grant of loan be considered for such discoms,” the official statement said.