DISCOMs (Distribution Companies) that are making heavy losses, above 15%, will not be granted any loans for capital expenditure or non-capital expenditure until they draw up a road map to reduce the losses over a definite time frame not more than 2 years, R K Singh, Union Minister of State (IC) Power and New & Renewable Energy directed in a review meeting of the two financing arms of the ministry — Rural Electrification Corporation (REC) and Power Finance Corporation (PFC) held on March 7.
The minister further said that they should 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 Minister also directed the two institutions that before granting of loan either for capital expenditure or for non-capital expenditure, the adherence to prudential norms must be carefully observed. He also noted that many distribution companies have been making heavy transmission and distribution (T&D) losses and it may be difficult for them to repay the loans.