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The government may increase the cash package for electricity distribution companies to Rs 1.25 lakh crore from Rs 9,000 crore announced in May. A source has given this information.

Finance Minister Nirmala Sitharaman had announced to provide cash to the distribution companies under an economic package of Rs 20 lakh crore to give relief to the economy affected by Kovid-19. Under this, the payment of the outstanding balance can be made from May 31, 2020 instead of May 20, 2020.

Initially, the loan was approved by the Power Finance Corporation and REC package on the basis of arrears till March 2020. A source said, "The Ministry of Power has made up its mind to increase the Rs. 9,000 crore package of distribution companies to Rs. 1.25 lakh crore."

Earlier, Power Minister RK Singh while addressing the Conference of Ministers of Power and New and Renewable Energy of the States and Union Territories through video conferencing said that the outstanding period under the cash package will be extended from March 2020 to May 2020.

He said that in view of the Kovid-19 epidemic and the 'lockdown' for its prevention, it has requested to extend the cash package and the outstanding loan period by a few more months. Singh also said that the states have asked for a loan of Rs 93,000 crore under the package, out of which Rs 20,000 crore has been approved so far.

Announcing the package in May, Finance Minister Nirmala Sitharaman said that the arrears on the distribution companies stood at Rs 94,000 crore. Due to the 'lockdown', the arrears of distribution companies have increased further. According to the receipts portal of the ministry, by May 2020, the arrears of power generating companies over distribution companies increased to Rs 1,25,958 crore. Out of this, the previous outstanding is Rs 1,14,133 crore.

The previous outstanding is the amount that has not been paid for more than 60 days. Producer companies charge interest on it. "We are planning to introduce a new version of the Kusum scheme," Singh said at the conference. Under this, feeders affiliated to the agriculture sector will be made solar powered. This will reduce the burden of subsidy on the state governments which they give in the name of irrigation. ''

Talking to reporters in the middle of the conference, Singh said that the government has already extended the deadline for installing equipment (FGD) to control emission standards in power plants. Power producers had expressed concern that tightening regulations on imports from 'prior reference country' such as China would prevent them from installing emission control devices within the stipulated time.