Power ministry seeks expert opinion for Rs 50,000-cr debt fund

The power ministry is consulting financial experts to work out the modalities of the proposed Rs 50,000-crore debt fund to finance electricity generation, transmission and distribution projects.

"We are in talks with some economic experts...Can't name them right now, they would advise us on the debt fund...How to go about it," a power ministry official said.

The ministry is mulling to set up a debt fund for financing projects with an estimated corpus of Rs 50,000 crore.

State-run lenders Power Finance Corporation and Rural Electrification Corporation may also be roped in for the same.

The ministry is also in constant dialogue with the Planning Commission to work out a blueprint of the proposed fund.

Meanwhile, the Planning Commission has proposed a Rs 1,00,000-crore National Electricity Fund (NEF) to finance development of power transmission and distribution network in the country, which would soon go to the Cabinet for its approval.

The plan panel had last year announced setting up of NEF to finance the development of power transmission and distribution network by state utilities, so as to reduce transmission and distribution (T&D) losses.

It had suggested that the government should provide interest subsidy aimed at bearing part of the interest cost by the Centre. For example, if a state utility plans to raise funds at an interest rate of 10 per cent, four per cent of that would be borne by the government.

Power Finance Corp and Rural Electrification Corp are likely to be the nodal agencies to finance state utilities, as a part of NEF.

The support of World Bank and Asian Development Bank could be sought for improving electricity transmission and distribution network in the country.