The ministry of power is set to approach the Cabinet for extension of the accelerated generation and supply programme (AG&SP) for the Tenth Five Year Plan. The programme, kicked-off in the first year of the current Plan period, has been a major success with the states.
The interest rate charged by Power Finance Corporation (which disburses funds under the scheme) on loans for qualified category of projects through the programme is four per cent less than the Corporation's prevailing lending rates, officials said. The scheme has great potential for raising investments due to its in-built subsidy provision on the interest on loans, senior power minstry officials said.
Cumulative disbursements under the programme during the Ninth Plan period (upto December 2001) have been Rs 7811 crore. The state sector achieving capacity addition targets of around 90 per cent during the Ninth Plan, is largely on account of the AG&SP, officials said. The programme has helped in commissioning of new generation capacity of 5219 mw during the Ninth Plan, of which 5144 mw in the state sector and 75 mw in the Central sector, officials said.
More From This Section
The programme was approved by the Centre in the first year of the Ninth Plan with the aim to accelerate power supply to consumers and included renovation and modernisation of old thermal and hydro plants. Completion of on-going generation projects, construction of missing transmission links and system improvement schemes for concessional financing through Power Finance Corporation (PFC) were other key objectives of the programme, officials said.
The programme provided incentives to state electricity boards, state and Central corporations and state power departments in the form of interest subsidy of four per cent on PFC's lending rates, on disbursements made by the corporation during the Ninth Plan to priority projects, officials said.
In view of the success of the programme, PFC had asked the power ministry for extension of the scheme for both the Tenth and Eleventh Plan periods. The Corporation had also asked the ministry to notify AG&SP not only for augmenting the generation of power as well as enhancing the budgeted subsidy level to Rs 500 crore annually for the 10th Plan, an official said.
The effectiveness of the scheme can be gauged from the fact that a total of Rs 1,900 crore interest subsidy as approved by government for the Ninth Plan would have leveraged about Rs 45,000 crore of investment into priority projects. According to power ministry estimates, if interest subsidy is kept at around Rs 2,500 crore for 10th Plan, it would spur investments to the level of about Rs 55,000 crore.
The scheme originally approved in 1997-98 had shown impressive results especially for completing the ongoing generation projects languishing for funds. Based on this review, the government had extended the scheme for full Ninth Five Year Plan ending 2002.
During the current plan period, a number of states including Uttar Pradesh, Rajasthan, Gujarat, Assam and Haryana have approached PFC seeking financial aid through the programme, officials said. At present, the government has made a provision of Rs 1,500 crore for this scheme.