After denying letters of comfort to distribution companies, Delhi government’s power department now proposes to issue such a letter to the state-owned Indraprastha Power Generation Company (IPGCL).
Officials said that the proposal for the letter of comfort in favour of Power Finance Corporation has been made to ensure that the plant can borrow capital on a short-term basis for operational costs and spare Delhi power shortages in the peak season.
Power Minister Satyendra Jain said that to give letters of comfort to IPGCL is not an issue. “We cannot give LOC to discoms but IPGCL is our own company. We can also give guarantee for IPGCL,” Jain said. IPGCL is owned fully by Delhi government.
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”We require power and someone needs to supply us. Being cash-strapped, companies asked for a letter of comfort from us so that they could get loan easily. As the government has decided not to give letters to the discoms, we have proposed to give them to a government company,” an official said.
In its note, the power department has mentioned that IPGCL should be given a letter of comfort as it requires a short term loan of Rs 100 crore. In the proposal mooted on May 26, the power department has said that due to liquidity crunch, fund for working capital requirement are borrowed from banks in the form of short-term loans.
Earlier too, in February and May 2014, similar letters of comforts for IPGCL and PPCL were issued in favour of Power Finance Corporation and SBI.