Scindia meets bankers, all ears to concerns on power sector lending

Feb 09 2013, 01:50 IST
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SummaryUnion power minister Jyotiraditya Scindia on Friday met leading bankers and listened to their concerns over lending to the power sector.

Union power minister Jyotiraditya Scindia on Friday met leading bankers and listened to their concerns over lending to the power sector.

“Bankers told the minister the problems they face while lending to the power projects... Fuel availability and environment hurdles are also matters of concern,” Scindia told reporters after an hour-long meeting. The meeting was attended by representatives of PSU banks, including Punjab National Bank, Andhra Bank and Central Bank. “We discussed various issues, including gas availability, health of discoms and financial restructuring package (FRP) for the discoms,”said Scindia.

“FRP will increase the health and vitality of discoms and that is the ultimate purpose. Discoms that have done well will get a huge jump up in ratings,” he said. The government, last year, approved restructuring debt of R1.9 lakh crore of ailing state electricity distribution companies (discoms).

“We are going to pass a rating system for all the discoms in the country from April 1 to bring in transparency and accountability in generation, transmission and distribution of power,” he said.

“CARE and ICRA will work on rating discoms,” he said. Lending to discoms will be based on ranks given by the agencies, he added.

Banks have become cautious about lending to the power sector in view of the growing risks of default due to discoms’ poor financial health.

Sources said the meeting also discussed standard bidding documents (SBDs) for power projects, which are currently under revision. “SBDs are almost final and we are waiting for an EGoM date so that we can take that forward,” he said. An empowered group of ministers will finalise the revised SBDs.

The minister also indicated that he intends to meet stakeholders more often in the future. "This is not a one of meeting. I do intend to meet with all stakeholders on a six monthly basis or a quarterly basis as the need may be and take this process forward," he said. On the tariff issue, Scindia said regular tariff revision is essential not just to ease lending but also to boost private sector investment.

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