RK Singh directs REC and PFC not to grant any loan to DISCOMs which are making heavy losses, unless they draw up a road map for reducing the losses

R K Singh, Union Minister of State (IC) Power and New and Renewable Energy took a review meeting of the two financing arms of the Power Ministry – Rural Electrification Corporation (REC) and Power Finance Corporation (PFC) on March 7, 2018.

The Minister 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 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.

The Minister directed that DISCOMs (distribution companies) which are making heavy losses (above 15%) 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 2 years), and they 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.