New Delhi [India], Aug 19 (ANI): The Cabinet Committee on Economic Affairs has approved a one-time relaxation to Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) for extending loans to Distribution Companies (discoms) above limits of the working capital cap of 25 per cent of last year's revenues under Ujwal DISCOM Assurance Yojana (UDAY).

Briefing reporters about cabinet decisions, Information and Broadcasting Minister Prakash Javadekar said that one-time relaxation would help in providing liquidity to the power sector. It will also help ensure payments by state governments to discoms.

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An official release said that the outbreak of COVID-19 in the country and the consequent nationwide lockdown has exacerbated the liquidity problems for the power sector and the revenues of the power distribution companies have nosedived as people are unable to pay for the electricity consumed while power supplies, being an essential service, have been maintained.

"Energy consumption has decreased substantially. The liquidity of the power sector is not expected to improve in the short term, as economic activity and power demand will take some time to pick up. There is, thus, an immediate need to infuse liquidity in the power sector for the continuation of power supply," the release said. (ANI)

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(The above story is verified and authored by ANI staff, ANI is South Asia's leading multimedia news agency with over 100 bureaus in India, South Asia and across the globe. ANI brings the latest news on Politics and Current Affairs in India & around the World, Sports, Health, Fitness, Entertainment, & News. The views appearing in the above post do not reflect the opinions of LatestLY)