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Financial Products

Policy For Funding Against Regulatory Assets (Excluding return On Equity Component) Of Power Utilities

Eligibility

  • The funding against the regulatory assets shall be available only toState Electricity Boards, State Power utilities such as DISCOMs, TRANSCOs etc. and Joint Ventures between government and private sector (with governmenthaving a minimum 26% share)

Purpose

  • To provide financial assistance against the regulatory assets of PowerUtilities with identified amortization schedule.

Basis of funding

  • The funding shall be available only against the regulatory assetsrecognized by the respective State Electricity Regulatory Commission(SERC) and recovery schedule included in the tariff order.Funding shall be available only against regulatory assets recognized inprevious three years' tariff orders. A time bound recovery plan of the regulatory asset by SERC shall be inplace. A plan for recovery of carrying cost of the regulatory assets by SERCshall be in place.A business plan of the utility for turnaround of cash flow shall be in placeand made available to REC.

Extent of funding

  • The funding against regulatory assets shall be limited to the lowest of thefollowing amounts:
  • The funding shall be limited to 50% of the total regulatory assetsrecognized & recovery plan issued by SERC.The funding shall be available only against regulatory assets not beingfunded from any other financial institutions, banks etc.Not more than Rs. 5000 Crore shall be funded to a single utility underthis policy. In case of joint sector borrowers not more than Rs. 2000Crore shall be funded depending upon the financial health, securityprovided and Quantum of Government holdings.The extent of funding shall be limited to the exposure available as per thePrudential Norms of REC/maximum permissible exposure as per latestState Grading Circular.

Rate of Interest

  • The rate of interest shall be as per applicable REC guidelines. For joint sector borrowers, a risk premium of 0.5% over and above therate shall be applicable.

Tenor of the funding

  • The tenor of the loan for funding of Regulatory Assets shall not exceedthe amortization period allowed by the respective SERC subject to amaximum tenor of 10 years.

Repayment Period including Moratorium Period

  • Repayment period shall be on quarterly basis or as per the REC policy. Moratorium period of not more than 6 months shall be given to the borrower.