GUWAHATI: In a move to bolster the financial stability of key power companies, the Assam Cabinet has decided to convert Grants-in-Aid provided to APDCL, AEGCL, and APGCL by the Assam Government into a loan.
This loan will subsequently be transformed into equity, as of March 31, 2023.
The Grants-in-Aid, which amounted to a total of ₹5,435.8 crore before the fiscal year 2021-22 and an additional ₹1,099.51 crore between the fiscal years 2021-22 and 2023-23, will be shifted to equity investment by the state government.
This transformation is expected to yield several benefits, including an enhancement in the companies' net worth, an improved debt-equity ratio, a better debt service coverage ratio, and a reduction in finance costs, ultimately leading to minimised losses for the companies.
Additionally, this innovative approach opens up opportunities for enhanced Return on Equity (RoE).
This decision aims to contribute to the efficient management of energy resources in the state.