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English Release 30-October 2014
Date Month Year
  • President's Secretariat
  • President to flag off the ‘Run for Unity’ tomorrow at Rashtrapati Bhavan
  • Vice President's Secretariat
  • STUDENTS FROM J&K UNDER AEGIS OF SADBHAVNA EDUCATIONAL /MOTIVATIONAL TOUR CALL ON VICE PRESIDENT
  • Vice President Inaugurates 7th Asia-Pacific Heart Rhythm Scientific Session
  • Prime Minister's Office
  • PM condoles loss of lives in Sri Lanka landslide
  • Shri Azim Premji calls on the Prime Minister
  • Goa CM calls on PM
  • Department of Space
  • Engineers’ Conclave-2014 to be held in Bangalore
  • Min of Agriculture
  • Shaida Moh. Abdali Afghanistan Ambassador Calls on Union Agriculture Minister Shri Radha Mohan Singh
  • Good Performance of NCDC
  • Min of Consumer Affairs, Food & Public Distribution
  • Sugar production estimated 250.46 lakh tons during 2014-15
  • Ministry of Finance
  • Government Committed to Increase Savings Rate in the Country: Secretary, Financial Services;
  • Finance Minister Asks the Senior Officers of the Income Tax Department not to Lose Sight of Domestic Black Money
  • Min of Health and Family Welfare
  • For ending TB, Dr Harsh Vardhan calls for “Power of belief”
  • Min of Home Affairs
  • Activities on Rashtriya Ekta Diwas celebrations on 31st October
  • Union Home Minister Approves Grant of Higher Compensation to Victims of Riots, Naxal and Terrorist Violence
  • Min of Human Resource Development
  • Ministry of HRD to Host 2nd Meeting of SAARC Education Ministers
  • Min of Personnel, Public Grievances & Pensions
  • Early closure of Government Offices today in connection with the “Run for Unity” flag off at Vijay Chowk
  • ACC Appointments
  • Min of Petroleum & Natural Gas
  • Global crude oil price of Indian Basket was US$ 85.14 per bbl on 29.10.2014
  • Min of Urban Development
  • Japan offers assistance in promoting Intelligent Transport Systems
  • Ministry of Water Resources
  • Uma Bharti to Visit Kanpur Tomorrow
  • Min of Women and Child Development
  • Smt. Maneka Sanjay Gandhi to hold first round of Regional Consultations on Beti Bachao Beti Padhao Scheme in Chandigarh tomorrow

Previous Date

 
Cabinet Committee on Economic Affairs (CCEA)13-December, 2011 19:56 IST
National Electricity Fund (Interest Subsidy) Scheme to subsidize interest rate on loans

The Cabinet Committee on Economic Affairs today approved setting up of the National Electricity Fund (Interest Subsidy Scheme) to provide interest subsidy etc. aggregating to Rs.8466 crore for a period of 14 years for projects of electricity distribution sector.

The scheme will become operational within a period of 6 to 12 months.

The National Electricity Fund (Interest Subsidy Scheme) is being set up to provide interest subsidy on loans to be disbursed to the Distribution Companies (DISCOMS) - both in the public and private sector, to improve the distribution network for areas not covered by Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY) and Restructured Accelerated Power Development and Reforms Programme (R-APDRP) project areas, The preconditions for eligibility are linked to certain reform measures taken by the States and the amount of interest subsidy is linked to the progress achieved in reforms linked parameters. The nodal agency for National electricity Fund(NEF) would be Rural Electrification Corporation Ltd(REC).

In order to evacuate and distribute the power generated as a result of the ambitious capacity addition programme, commensurate investment is required in transmission and distribution sector. The DISCOMS, which handle the distribution sector, are in financial stress due to a variety of reasons. The national average Aggregate Technical and Commercial (AT&C) loss during 2007-08 was 29.24%, ranging from 13.10% to 61.59% for different DISCOMS. The Thirteenth Finance Commission had reported that the projected aggregate losses of State Transmission and Distribution Utilities at 2008 tariffs would be at Rs.1,16,089 crore by 2014-15. Thus the Central government intervention is required for revamping and restructuring the distribution sector.

The investments in distribution sector are already being undertaken under the RGGVY and R-APDRP covers towns with population of more than 30,000 (10,000 in case of Special Category States). RGGVY primarily addresses the issue of providing access of electricity to un-electrified or partially electrified villages. The scope of works and amount of investment in these schemes is not adequate to meet the entire requirement of the distribution sector. There is no scheme to cover towns with population of less than 30,000 (10,000 in case of special category States); for reduction of AT&C losses in rural areas; for augmentation of distribution networks necessitated by capacity addition; for system strengthening and upgradation; and for encouraging States to undertake agricultural and domestic feeder separation in rural areas. While it is important to channelise investments in distribution sector, it is also equally important to link these investments to reforms, as the viability of the entire power sector depends on the viability of the distribution utilities. Accordingly, the proposed scheme links interest subsidy with reforms.

There would be two categories of States for working out the interest subsidy-special category and focused states, and States other than special category and focused states. The precondition of eligibility are operationalisation of State Electricity Regulatory Commission (SERC), formulation of business plan for turn around of utilities in a times bound manner, reorganization of State Electricity Boards (SEB), release of subsidy, submission of audited annual accounts and timely filing of tariff petition. Any pre-condition of eligibility can be relaxed/modified to overcome any difficulty in operating this Scheme, with the specific approval of Steering Committee, to be chaired by Secretary(Power).

Financial implications of the National Electricity Fund would be interest subsidy aggregating Rs.8466 crore spread over 14 years for loan disbursement amounting to Rs.25,000 crore for distribution schemes sanctioned during the 2 years viz., 2012-13 and 2013-14. The outlay of' Rs.8466 crore would cover payment of interest subsidy to the borrowers, service charges to the nodal agency, payments to independent evaluators and other incidental expenses.

The implementation of the scheme would result in reduction of AT&C losses, reduction of gap between Average Cost of Supply and average revenue on subsidy received basis, improving return on equity and issue of notification of multiyear tariff along with investment in distribution sector. This scheme will facilitate Central government intervention, and catalyst for revamping and restructuring the state sector distribution scheme.

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SH/SKS
(Release ID :78626)

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