Private power firms to get more funds

Private distribution companies will now be eligible to get funds for improving distribution systems under the Accelerated Power Reform and Development Programme (APDRP).

The Centre has recommended changes in the funding pattern for the programme to make this possible.

The power ministry has proposed to do away with the loan component it gives to states. Instead, it will only provide 25 per cent of the amount as grant. The rest will have to be raised by counterpart funding.

In the current fiscal, the power ministry also plans to expand the programme to cover an additional 180 districts and has asked the finance ministry to hike the allocation for the programme to Rs 4,940 crore.

The allocation for the APDRP in 2005-06 has been cut to Rs 2,100 crore from Rs 3,500 crore in 2004-05 because of the low offtake of funds.

At present, the Centre provides 50 per cent of the funds for the incentive component of the programme. Of this, 25 per cent is a grant and another 25 per cent is loaned for the strengthening and to upgrade of the sub-transmission and distribution network.

The balance has to be provided by state electricity boards (SEBs) and utilities from Power Finance Corporation, Rural Electrification Corporation, other financial institutions or from their own resources as counter part funds.

Private discoms are, however, not getting funds under the APDRP as there are some ambiguities about who will be responsible for repayment of the loan component forwarded by the Centre.

It has therefore been decided to do away with the loan component of the Centre's allocation. The APDRP was introduced in 2003 with the aim of accelerating distribution sector reforms.

It aims to reduce AT&C losses to 15 per cent, bring about commercial viability in the power sector, reduce outages and interruptions and increase consumer satisfaction. The scheme has two components -the investment component and the incentive component.

Release of funds is linked to measurable targets. The performance criteria include putting in place a regulatory framework, restructuring of SEBs, reduction in T&D losses, curtailing revenue arrears, plant load factor, manpower reduction and reduction of cash losses.

Under the incentive component, an incentive equivalent to 50 per cent of the actual cash loss reduction by SEBs/Utilities is provided as grant.

2000-01 is the base year for calculation of loss reduction in subsequent years.