AP Government Backs ₹1,950 Crore in Fresh Power Sector Borrowings with Sovereign Guarantees

The Chandrababu Naidu-led administration has approved sovereign guarantees for fresh loans totaling ₹1,950 crore raised by state power utilities to support energy infrastructure and liquidity needs. Under orders from the Energy Department (G.O.Ms.No. 74), the government backed a ₹950 crore medium-term loan taken by APTRANSCO from the Power Finance Corporation (PFC). It also guaranteed another ₹1,000 crore special term loan availed by APPFCL from the Housing and Urban Development Corporation (HUDCO).

The order, cleared by the Finance Department and signed by Special Chief Secretary K. Vijayanand, comes with strict conditions. While the guarantee covers both principal and interest, APTRANSCO must repay the loans entirely from its own operational revenues, with the government guarantee kicking in only in case of default. APTRANSCO must also pay a 5% guarantee commission to the state exchequer, with no penalty for early repayment.

The move highlights the government's continued reliance on central financial institutions to fund power sector operations and infrastructure upgrades. While it eases borrowing costs without directly straining the state's consolidated fund, such off-budget, guarantee-backed debt remains a politically sensitive issue in Andhra Pradesh, with opposition leaders often questioning the liabilities piling up through state-run corporations.