The Andhra Pradesh government is understood to have decided borrow Rs 1500 crore from the State Bank of India to partially clear the loans obtained from Rural Electrification Corporation so as to avoid being declared as “defaulter” by the Central government organisation.
According to a section of reports, the Jagan Mohan Reddy government sought the help of its advisor on investments Rajnish Kumar, a former chairman of the SBI, to use his good offices in securing an urgent loan of Rs 2500 crore to clear the loans due to be repaid to the REC.
The advisor managed to secure a loan of Rs 1,500 crore using his contacts in the SBI in Mumbai, so that it could help the state repay the loan and get out of the crisis now, the reports said.
Both the REC and Power Finance Corporation had already written to the state government last month asking it to repay the pending loans; otherwise, they would have to declare the state power utilities as defaulters and non-profitable assets. This would mean, the state government would not be able to borrow loans from any other source.
On Wednesday, REC chairman and managing director Sanjay Malhotra and PFC CMD Dr Ravinder Singh Dhillon met the state government officials and also the chief minister to discuss the loan outstanding.
A statement from the CMO said they held meetings with the Chief Minister, Chief Secretary and Energy Secretary. The discussions were held on Results Linked Distribution Sector Scheme (RDSS), liquidity infusion and Power Sector.
The media reports, however, said both the officials categorically told the state government that it would have to clear all the pending loans, since it would affect the survival of the electricity discoms. They suggested that by implementing the RDSS, the discoms can overcome losses.