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COVID 19: CCEA okays steps to provide liquidity in the power sector
New Delhi, August 19, 2020
The Cabinet Committee on Economic Affairs (CCEA) today approved a one-time relaxation to Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) for extending loans to Distribution Companies (DISCOMs) above the limits of the working capital cap of 25% of last year’s revenues under Ujwal DISCOM Assurance Yojana (UDAY).
The one-time relaxation would help in providing liquidity to the power sector and ensure payments by State Governments to DISCOMs, an official press release said.
The outbreak of the global COVID-19 pandemic in the country and the consequent nationwide lockdown has exacerbated the liquidity problems for the power sector, it said.
Revenues of the power distribution companies have nosedived as people are unable to pay for the electricity consumed while power supply, an essential service, was maintained. Energy consumption has decreased substantially.
The liquidity of the power sector is not expected to improve in the short term, as economic activity and power demand will take some time to pick up. There is, thus, an immediate need to infuse liquidity in the power sector for the continuation of power supply, the release added.