'Direct funding for power firms to cut delays'

A committee appointed by the government is likely to recommend direct release of funds to power utilities instead of routing allocations through state governments.

The move is aimed at improving the use of funds for the accelerated power development reforms (APDR) programme.

Headed by former Power Secretary P Abraham, the committee was formed in April 2006. It is expected to submit its report by July 25 to the Union power ministry.

"The recommendations of the committee are ready and it has been decided that the scheme will continue in the Eleventh Plan. It is also likely to recommend incentives as well as capital expenditure on investments be continued," a power ministry official told Business Standard.

In the present system, fund allocations under the APDR programme are routed through states. This causes delays and results in poor reduction in aggregate transmission and commercial losses (AT&C).

The Planning Commission had suggested a revision of the programme by providing incentives to states. "The performance of states is varied and has not been as per expectations," a Planning Commission official said.

In its draft approach paper to the Eleventh Plan (2007-12), the apex Plan panel has looked at the abysmal performance of the APDR programme, which will not be able to bring down AT&C losses to 15 per cent by 2007.

The APDR programme was created for upgrading the distribution system, minimising transmission and distribution losses, improving metering and assigning responsibility for realisation of user charges.

The programme was started in the year 2000-01 in order to restore the commercial viability of the distribution sector.