A reform-linked support package of $300 million for restructuring the power sector in Gujarat is on the anvil by the end of this year.
Sources said under the package, Asian Development Bank (ADB) is to provide $200 million and rest by the government. They added that the government will negotiate the $200 million loan to Gujarat this month and is hopeful of getting it cleared by the ADB, by December. The support is proposed to come in four reform-linked tranches of $50 million each.
The Gujarat power sector development project had been in the pipeline since 1997. The project was hanging fire for last three years due to delay in reaching at an understanding between the ADB and the state government, on critical policy issues related to the reform of the power sector in the state.
However, power ministry sources said with the state government now on the course of removing all the hurdles, it should not be difficult for the ADB to clear the loan. They said the state is all set to clear its Electricity Bill within a fortnight. The power ministry has recommended some changes in the Bill which includes modifications in the provisions for removal of members of the state's Electricity Commission, sources added. The modified Bill, sources said, will be cleared by the state government soon. The state has also agreed to take steps for reducing transmission and distribution losses. The transmission centres will be linked with the IPPs in the state.
The state will allow management autonomy in commercial procurement of power, and modernise and upgrade the distribution system at few places, sources said.
Under the reform process, the state will establish separate transmission and electricity companies and will ensure passage of assets from electricity boards to the transmission company, over a fixed period. The state has envisaged completing metering in three years. The ADB had put these conditions for supporting the restructuring of the power structure in the state.
Sources said ADB has already cleared $730 million this year for supporting various infrastructure projects in the country. A $250 million loan for supporting power transmission projects was cleared by the bank in October. Two other projects cleared by ADB this year are: $180 million loan for Surat-Manor Tollway project and $300 million housing finance loan.
