NEW DELHI, June 6: The Centre plans to create a seven to ten-year "sinking-fund" mechanism as part of the central guarantee to outstandings run up by state electricity boards (SEBs) to public-sector energy undertakings. The finance ministry plans to issue long-term bonds at a discount rate attractive enough for banks to subscribe. The value of such bonds will be equal to or less than Rs 10,000 crore - roughly the amount owed by SEBs to Coal India, National Thermal Power Corporation, Powergrid Corporation of India, National Hydro-electric Power Corporation and the North Eastern Electric Power Corporation.The number of bonds to be issued will depend upon how much of the outstandings will be securitised, and how much of the central cover will be utilised to directly tap resources from the market. This decision will depend upon the public-sector units (PSUs). Once the subscription for bonds is completed, the amount will be passed on to the central PSUs for financing their on-going expansion plans.
