Multilateral Agencies Threaten Power Sector

While the utilisation of external assistance in the central sector is considered fairly satisfactory, the utilisation in the state sector is somewhat low. The major reasons for slow utilisation of external assistance loans in the state sector are generally paucity of counterpart funds with implementing agencies, delay in acquisition of land and contractual issues including delay in supply of equipment and execution of actual work. The power ministry is learnt to have taken the threat seriously and is monitoring and reviewing the externally-aided projects with a view to removing the various impediments arising in implementation. Special teams are also being sent from the Central Electricity Authority to the projects and the causes of delay taken up with state and Central authorities and suppliers of equipment.

 

Plans are to set up a project monitoring cell in the power ministry. The power sector gets external aid from the World Bank, the Asian Development Bank, OECF of Japan, KFW of Germany and ODA of the UK So far, these institutions have sanctioned loans amounting to Rs 17,146 crore for 75 power projects. Of this, Rs 2,750 crore was sanctioned a couple of years ago and will, therefore, take some time before being utilised.

The funding agencies have also expressed concern over the financial viability of the Indian power sector. Their concern focuses on the tariff structure, absence of a cost-related pricing policy, receivables position of the National Thermal Power Corporation, PowerGrid and other central public sector utilities, the need to improve the financial viability and physical performance of state electricity boards including reducing their T&D losses, slow project implementation, restructuring of SEBs and establishment of independent central and state regulators.