Finance Minister Nirmala Sitharaman on Wednesday announced a special liquidity infusion scheme for the fund starved power distribution sector. FM said the government will provide Rs 90,000 crore for the distribution companies (discoms) as part of its strategy to bring the country’s battered economy back on track.
Nirmala Sitharaman announced this as one of the 15 measures to combat the economic effect of coronavirus pandemic induced lockdown, which has worsened the already precarious finances of these discoms.
Welcoming the government’s move Sumant Sinha, ReNew Power said “The 90,000 cr liquidity infusion into discoms will breathe fresh life into the power sector and protect distribution companies from going bankrupt. This money will help the discoms to repay most of the Rs 92,000 crore outstanding payments that they owe to power generators, restarting the virtuous cycle of liquidity, higher investments and rapid growth for the power sector.”
He added “This may also be an opportune time for the government to convince states to expedite distribution sector reforms so that distribution companies don’t need a bailout next time and are able to become financially viable entities.”