Discom bonds to come at 45 bps premium

Friday, 05 April 2013 16:31 Lathish PV

Uma shankarThe State Electricity Distribution Utilities (discoms) that would issue bonds for restructuring their debts would come at 45 basis points premium, said Power Secretary P. Uma Shankar. The Finance Ministry has decided the transactional finance mechanism. This decided the way the rate of interest would be fixed. The bonds will have Government securities. There would be 25 basis points extra compensation for non-SLR status and another 20 basis points incremental return, Uma Shankar explained.

This 45 basis points would be in addition to the rates decided to launch the bonds on the particular date.

In addition, the financial restructuring programme for the sick Discoms has been extended till July 31. This is because three more States, Jharkhand, Bihar and Kerala, has shown interest to take up the scheme.

Till now, Uttar Pradesh, Tamil Nadu, Rajasthan, Haryana and Andhra Pradesh are ready to take up the debt-rejig scheme, said the Power Secretary.

According to the Centre's package, half of discom losses would be taken up by the respective State. For the remaining 50 per cent of the losses, distribution utilities would get three-year moratorium on principal payment. In the second phase, the Government expects the distribution utilities to become cash-surplus. Thereby, the remaining debt would be restructured for seven years.

These bonds would not be traded like other securities. The respective lenders to the discoms will only buy these bonds. The State Government will bear the interest and these would be getting transferred to the State account as per Fiscal Responsibility and Budget Management Act.

Source- Hindu