Govt ready with plan to fund power boards

A committee headed by Planning Commission member BK Chaturvedi will soon finalise a blueprint for the proposed Rs 1,00,000-crore National Electricity Fund that is aimed at providing support to cash-strapped state electricity boards (SEBs).

"This fund will be used to provide soft loans to the SEBs," said Chaturvedi.

"Although the power sector needs Rs 2,50,000 crore, the minimum amount we are aiming to raise is about Rs 100,000 crore," he added.

The proposal has been floated to provide capital to the SEBs that find it hard to get loans from banks.

Under the plan, the Power Finance Corporation and Rural Electrification Corporation would raise money from the market and loan it to power distribution companies.

"We have requested the finance ministry to facilitate this by providing sops and concessions for investment," said Chaturvedi.

The committee is scheduled to finalise its recommendations in two-three months.

Distribution is the weakest link in the power sector with national transmission and distribution (T&D) losses standing at 40 per cent. Chaturvedi said many state boards had not been successful in lowering these losses despite unbundling.

At present, the Accelerated Power Development and Reform Programme (APDRP) is the country's only programme to check T&D losses.

Under the new APDRP, to be launched soon, automated systems for sustained collection of baseline data will be set up and information technology used extensively for energy accounting.

Under the scheme, the power utilities' loans would be converted into a grant if they bring down T&D losses to 15 per cent.

Chaturvedi said the national electricity fund was supplementary to the APDRP as it would be on a much larger scale.