Government notifies scheme for financial restructuring of Discoms

Government notifies scheme for financial restructuring of Discoms
The government has notified a scheme for financial restructuring of State Owned Distribution Companies (Discoms). The scheme contains various measures required to be taken by State Discoms and State Governments for achieving the financial turnaround of the Discoms by restructuring their debt with support through a Transitional Finance Mechanism by Central Govt. The scheme will remain open up to 31st December unless extended by the GOI. Support under the scheme will be available for all participating State owned Discoms having accumulated losses and facing difficulty in financing operational losses.
 
For monitoring the progress of the turnaround plan, two committees at the State and Central levels respectively are proposed to be formed. Central Govt. will provide incentive by way of grant equal to the value of the additional energy saved by way of AT&C loss reduction beyond the loss specified under RAPDRP and capital reimbursement of 25 per cent of principal repayment by the State Govt. on the liability taken over by the State Govt. under the scheme.
 
The expected outcomes from the implementation of the proposed scheme would provide comfort to the lenders by securing State takeover of and guarantee for debt; bringing about financial discipline in the distribution sector in the State; providing a commercial orientation to the functioning of the distribution companies; casting responsibility on the State Govt to ensure a steady flow of revenue to the distribution companies by improving the efficiency of their operations;  accelerate the AT&C loss reduction effort of DISCOMs, through additional incentive from Central Govt;  ensure regular rationalization of tariff to cover cost of service;  gradual elimination of the gap between ACS and ARR; ensure timely audit of DISCOM accounts; improve the financial health of the distribution utilities to enable them to procure more electricity for meeting their growing demand.

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Government notifies scheme for financial restructuring of Discoms

Government notifies scheme for financial restructuring of Discoms
The government has notified a scheme for financial restructuring of State Owned Distribution Companies (Discoms). The scheme contains various measures required to be taken by State Discoms and State Governments for achieving the financial turnaround of the Discoms by restructuring their debt with support through a Transitional Finance Mechanism by Central Govt. The scheme will remain open up to 31st December unless extended by the GOI. Support under the scheme will be available for all participating State owned Discoms having accumulated losses and facing difficulty in financing operational losses.
 
For monitoring the progress of the turnaround plan, two committees at the State and Central levels respectively are proposed to be formed. Central Govt. will provide incentive by way of grant equal to the value of the additional energy saved by way of AT&C loss reduction beyond the loss specified under RAPDRP and capital reimbursement of 25 per cent of principal repayment by the State Govt. on the liability taken over by the State Govt. under the scheme.
 
The expected outcomes from the implementation of the proposed scheme would provide comfort to the lenders by securing State takeover of and guarantee for debt; bringing about financial discipline in the distribution sector in the State; providing a commercial orientation to the functioning of the distribution companies; casting responsibility on the State Govt to ensure a steady flow of revenue to the distribution companies by improving the efficiency of their operations;  accelerate the AT&C loss reduction effort of DISCOMs, through additional incentive from Central Govt;  ensure regular rationalization of tariff to cover cost of service;  gradual elimination of the gap between ACS and ARR; ensure timely audit of DISCOM accounts; improve the financial health of the distribution utilities to enable them to procure more electricity for meeting their growing demand.

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