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CCEA approves one-time relaxation to PFC, REC for extending loans to discoms

The Cabinet Committee on Economic Affairs has approved a one-time relaxation to Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) for extending loans to Distribution Companies (discoms) above limits of the working capital cap of 25 per cent of last year’s revenues under Ujwal DISCOM Assurance Yojana (UDAY).
Briefing reporters about cabinet decisions, Information and Broadcasting Minister Prakash Javadekar said that one-time relaxation would help in providing liquidity to the power sector. It will also help ensure payments by state governments to discoms.
An official release said that the outbreak of COVID-19 in the country and the consequent nationwide lockdown has exacerbated the liquidity problems for the power sector and the revenues of the power distribution companies have nosedived as people are unable to pay for the electricity consumed while power supplies, being an essential service, have been 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 said.

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