Decoding the MSME and Construction Packages
Vijay Agrawal writes about the first beneficiaries of PM’s Rs 20 tn package. May 2020
Finance Minister Nirmala Sitharaman announced several measures yesterday, including those for Discoms, construction contractors, the MSME sector, the real estate sector, among others. In this article, we take a look at the measures announced for Discoms. For Discoms, a onetime emergency liquidity infusion has been announced – Rs 90,000 crore to all Discoms against all receivables.
Says Rajiv Srivastava, Managing Director and CEO, Indian Energy Exchange, “The most remunerative source of income for Discoms from industrial and commercial users has been deeply impacted by the COVID-19 lockdown. The 90,000 crore liquidity injection is a welcome relief for financially stressed Discoms. The measures like PFC/REC loans, rebates and reforms announced by the Central Government will go a long way in creating the much needed fiscal space in the power sector value chain.”
He tells us that Indian Energy Exchange has been at the forefront to support Discoms in their dual role of ensuring 24 x 7 uninterrupted power availability as well as enabling optimisation that improves financial liquidity during the crisis. “They have met increased domestic demand as well as demand from the stressed healthcare and utilities sector and replaced costlier generation with low cost power available on the Exchange, thereby reducing power procurement costs leading to significant savings.”
According to Sandeep Upadhyay, Managing Director-Infrastructure Advisory, Centrum Capital, “Fresh injection of Rs 90,000 crore into Discoms would certainly lead to financially de-stress them and in turn improve the liquidity for power generation companies. This was long due and hopefully would lead to end-consumers getting benefited in terms of cheaper tariffs, however, that is likely to happen on a medium to long term.” He adds that going forward, one needs to ensure that developers and the investors get a clear understanding and the precise details of the upcoming projects to start preparing for it sooner than later.