The Union Ministry of Power has written to all states and union territories extending Rs 900 billion financial package to assist the stressed power distribution companies. Under this intervention, public sector undertakings, REC and Power Finance Corp. (PFC) would extend special long-term transition loans of up to 10 years to distribution companies. The letter mentioned that the COVID-19 pandemic and the resultant lockdown had adversely affected the power sector finances, creating a situation of acute liquidity crisis across the entire value chain. In this situation, the liquidity infusion in the power sector will help to tide over the cash flow problem. This will help distribution companies to repay most of the money that they owe to the power generation and transmission companies. The ministry also decided to defer the unscheduled fixed charge on the power of central generation companies for the lockdown period, which will now be repaid in interest-free three equal instalments in subsequent months. The nationwide lockdown witnessed a significant drop in demand due to the closure of industrial and commercial units.
