Business

Rs. 51,577-cr. scheme to reform power sector

NEW DELHI: The Union Cabinet on Thursday gave its approval to a restructured Accelerated Power Development and Reform Programme (APDRP) with a total cost of Rs. 51,577 crore covering a total of 571 projects.

The initiative, aimed at cutting commercial losses of Central and State utilities, has the backing of Prime Minister Manmohan Singh. Dr. Singh, during the May 28, 2007 Chief Ministers conference on power, promised to put in place an incentive-based APDRP for the States to give thrust to distribution reforms. The State-run Power Finance Corporation will be the nodal agency for executing the programme.

At its meeting, the Cabinet approved an allocation Rs. 17,033 crore in the first phase. Of this, the grant component is Rs. 6,445 crore and the loan component Rs. 2,274 crore, Finance Minister P. Chidambaram told newsmen after the Cabinet meeting. The loan will be for those who accept certain parameters both in the utility areas and project areas. In the project area the utilities have to bring down Aggregate Technical & Commercial (AT&C) losses to below 15 per cent, whereas in the utility area which is a larger area, they have to bring them down by 3 per cent or 1.5 per cent depending upon where they are. If they achieve the parameters, 50 per cent of loan will be converted as grant, Mr. Chidambaram added. The Central government had in 2003 approved an APDRP to accelerate distribution sector reforms. Besides reducing AT&C losses, the scheme seeks to bring commercial viability into the power sector and reduce outages and interruptions.

The government provides 50 per cent Central assistance for strengthening and upgrading sub-transmission and distribution network. According to the Minister of State for Power, the focus will be on establishment of base line data and fixation of accountability, and reduction of AT&C losses through strengthening and up-gradation of sub-transmission and distribution network and adoption of Information Technology.

The project area will be towns and cities with a population of more than 30,000 and 10,000 in case of special category States. Rural areas with heavy loads requiring feeder segregation may also be included in the project areas. Projects will be taken up in two phases. Part-A will include projects for establishment of baseline data and IT applications for energy accounting/auditing and IT-based consumer service centres. Part-B shall include regular distribution strengthening projects. Initially 100 per cent funds for Part-A and 25 per cent funds for Part-B projects will be provided through loan from the Union government. For special category States, loan for Part B projects will be 90 per cent. The balance funds for Part B projects will be raised from financial institutions.

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