More power to villages

The Cabinet Committee on Economic Affairs (CCEA) today approved in-principle a new rural electrification scheme with enhanced Central subsidy.

It also cleared the construction of a transmission system at an estimated cost of Rs 464 crore for evacuating power from the National Thermal Power Corporation's Kahalgaon power project in Bihar.

The committee also approved the first revised cost estimate of Rs 322.55 crore for the 84 megawatt Agartala Gas Turbine Power Project to be executed by the North Eastern Electric Power Corporation in Tripura. The estimate includes interest cost during construction of Rs 10.57 crore and working capital margin of Rs 4.95 crore. The cost of the 4x21 MW project had been originally estimated at Rs 294.05 crore.

Senior government officials said that the power ministry will discuss details of the 'Scheme for Rural Electricity Infrastructure and Household Electrification' with the Planning Commission and the finance ministry before reverting back to the CCEA.

Finance Minister P Chidambaram told reporters that the scheme has to be strengthened after discussing key issues related to the availability of power, criteria for franchisee agreement and obligations of state governments.

The power ministry proposed to raise the grant component to 90 per cent from 40 per cent at present. The remaining 10 per cent is to be funded through debt. The scheme will entail an additional Central outlay of Rs 3,000 crore during the remaining period.

It is estimated to cost Rs 17,000 crore to provide electricity to all 7.8 crore rural households by 2009. The government will need to spend Rs 10,000 crore during the Tenth Plan period, while Rs 7,000 crore is to be spent over the first two years of the Eleventh Five Year Plan.

An allocation of Rs 6,000 crore for rural electrification has already been made in the Tenth Plan.

The power ministry also sought to involve NGOs and other bodies through franchisee agreements for activities such as bill collection.