<div>Union Power Minister Piyush Goyal has said the implementation of the revival package of the near bankrupt state-run power utilities will result in total savings of nearly $30 billion by FY 2018-19.</div><div> </div><div>"If all goes as planned, the Uday scheme (the nomenclature of the revival package involving taking away the Rs 4.3 trillion debt of the discoms' books), will help save nearly $30 billion in total by FY15," Goyal told investors here this evening.</div><div> </div><div>The government last week approved a rescue package for discoms under which states would over the next two years be allowed to take on 75 per cent of the debts of their utility companies.</div><div> </div><div>The banking sector as a whole has a huge exposure to the near bankrupt state-run discoms to the tune of Rs 4.3 trillion in principle alone and over Rs 5 trillion if interest and unpaid dues are counted. These discoms have accumulated losses of about Rs 3.8 trillion.</div><div> </div><div>Goyal assured that the state-run Power Finance Corporation and Rural Electrification Corporation, which have an exposure of around $20 billion to the discoms, will not be forced to buy the bonds to be issued by the respective states under the scheme at 8.8.5 per cent yield.</div><div> </div><div>He also said this is aimed at protecting the balance sheet of PFC, which gets loans at 7.5 to 8 per cent.</div><div> </div><div>"We will not stress PFC and REC's balance sheets with these bonds which will be priced at 8-8.5 per cent. It could only affect their working capital requirement," he said, adding this is the reason why the government will be selling these bonds in the market.</div><div> </div><div>Claiming that there is a huge appetite in the market for such bonds as the renewable and transmission sectors are doing well, the minister said he has already spoken to pension funds, provident funds and insurers.</div><div> </div><div>He said once the scheme is implemented PFC and REC can unlock their $20 billion exposure and invest further in projects.</div><div> </div><div>"I believe they (PFC and REC) can even expand their loan book in the next two to three years. Both can fund up to $60 billion in the next five years in fresh investment," Goyal said.</div><div> </div><div>Announcing the revival plan last week, Goyal had said that the state discoms in Rajasthan, Uttar Pradesh, Tamil Nadu and Haryana are the biggest loss-making ones, while seven more other state utilities are stressed.</div><div> </div><div>The Uday scheme involves a massive bailout of the Rs 4.3 trillion debt of discoms besides measures to cut power thefts and align consumer tariff with generation cost. Under the plan the states can take over 75 per cent of their debt as of September 30 and pay back lenders by selling bonds. But this will not be added to fiscal deficit of the states. For the remaining 25 per cent, SEBs will issue bonds.</div><div> </div><div>The Centre will also ease rules to allow the states participating in the scheme to borrow more and help with the additional burden.</div><div> </div><div>The rescue plan, called Ujwal Discom Assurance Yojna or Uday, provides "a permanent resolution of past as well as potential future issues of the sector" and empowers the utilities to break-even in next tow-three years.</div><div> </div><div>Goyal also claims that the restructuring will bring dowb SEBs' interest cost to 8-9 per cent from a high 14-15 per cent now, while their operational losses are pegged at 15 per cent by FY19 from around 22 per cent now.</div><div> </div><div>(Agencies)</div>
