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Rajasthan utilities seek debt recast


Distribution companies of the Rajasthan State Electricity Board (RSEB), which together have a total debt of Rs 55,000-60,000 crore, are looking to restructure a part of the borrowings while refinancing the rest, Sanjay Malhotra, the state’s principal secretary for energy confirmed on Tuesday.

FE had reported on June 4 that RSEB was looking for a second round of restructuring, having already recast its short-term liabilities under the financial restructuring programme (FRP) in 2013. Malhotra clarified to FE that the refinancing and restructuring were parallel exercises.

“We are looking to swap some part of the debt by either issuing bonds or even borrowing overseas and for this we will be appointing investment bankers. At the same time we have approached the banks since we would like a longer moratorium period for five years rather than three years,” Malhotra said. The principal secretary added that RSEB was also looking for operational funding as also a lower rate of interest from lenders.

There are three consortia comprising 26 banks that have lent to discoms in Rajasthan: Central Bank is the lead bank for the Jaipur discom while Bank of Baroda is the lead bank for the Ajmer discom. In separate discussions with banks, RSEB is understood to be negotiating for a reduction in the rate of interest.

RSEB’s accumulated losses are estimated at R81,000 crore though the revenue gap in FY15 was R13,000 crore, a shade lower than the R16,000 crore reported in FY14. The short-term working capital loans of discoms as on March 31 amounted to R52,402 crore. However, since the average interest rate on these is 12.75% with some loans contracted at a higher rate of 14% to 18%, the annual interest costs are in the region of R6,000 crore.

Between FY12 and FY15, the state hiked tariffs in the range of 17% to 22% annually. The tariff hike for FY16 is yet to be filed with the state regulator.

The state subsidy — for both discoms and generating companies — is Rs 18,000 crore, of which discoms account for Rs 15,650 crore. RSEB has improved their performance in the last few years. While in FY15, 67% of costs were recovered, this year 70% of costs are expected to be recovered.

The date for the FRP to be submitted by the investment bankers has been extended by about 10 days from the earlier deadline of June 23. “In order to optimise the costs and reduce the burden of short-term loans, there is a need to undertake restructuring/swapping of existing loans to reduce interest rates and also to identify available options for financing the future loan requirement of the Rajasthan power utilities at competitive rate of interest,” the document states.

In addition to the short-term working capital loans, the companies have also taken capex loans for upgrading and strengthening generation capacity and the transmission and distribution network to cater to the increased demand of power in the state which for the five companies adds up to Rs 42,368 crore, resulting in an annual interest burden of around Rs 4,500 crore for all the utilities.

Rajasthan had participated in the Centre’s FRP initiated in September 2012, restructuring Rs 38,000crore of short-term loans. The restructuring will be discussed by a committee chaired by the Union power secretary at a meeting on July 3. RSEB was unbundled into one generation company, one transmission company and three distribution companies in July 2000.

Rajasthan is hoping to become a power surplus state with 4,000 MW of capacity to be commissioned soon and is not looking to purchase power, Malhotra said. “As of now we are comfortable and there is no need for any PPAs (power purchase agreements),” he said

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