Finance Minister Arun Jaitley promised a National Electricity Fund in Union Budget 2014-15 to help power distribution companies but a huge amount in the existing scheme of Financial Support for Debt Restructuring of Discoms, commonly called FRP-II, is underutilised.
Of the budgetary allocation of Rs 1,500 crore in 2013-14, only Rs 125 crore was used. The government has, therefore, provided only Rs 400 crore for FRP-II this year.
To improve the distribution network across the country and bring in greater investment, the finance minister proposed to create the fund, which will facilitate interest subsidy on the loans to be disbursed to the distribution companies across the country. The fund would be available to both public and private distribution companies unlike the FRP, which is only for government-controlled discoms. Distribution companies across the country face losses due to increasing power cost.
Officials revealed FRP-II, set up to help loss-making distribution companies and ensure their long-term viability, will continue to exist.
“This scheme will run in tandem with the interest subvention scheme announced by the finance minister in the Union Budget. This will be an added benefit for the discoms, which are facing cash crunch,” said an official at the power ministry.
Power distribution companies across the country have been under pressure due to increasing power rates and rising demand. Regions across the country faced a peak power deficit ranging from 11.3 per cent in the northeastern region to 6.9 per cent in the southern region in June.
Senior officials at NTPC said there was no deficit in terms of generation of power. “248,000 Mw is a decent amount to meet the energy needs of the country. It’s the distribution network that needs to be strengthened to use the generated power optimally. The country can’t afford energy wastage,” said a senior NTPC official, requesting anonymity.
About 35 per cent of the power generated is lost in transmission and distribution. “Distribution reform is not a function of money. The power distribution in the country needs strict governance and (there should be a) resolve to bring in reforms,” said A K Khurana, director-general, Association of Power Producers.