PowerMin wants Rs 1,500 cr in FY14 for discom restructuring

Last Updated: Sat, Feb 16, 2013 04:57 hrs

Determined to ensure its ambitious turnaround plan for ailing distribution companies meets with success, the power ministry has sought a Rs 1,500-crore budgetary support for funding the Transitional Finance Mechanism (TFM) under the scheme in 2013-14.

It also wants Rs 4,500 crore for its rural electrification programme, the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), an 80 per cent jump over the revised estimate of Rs 2,492 crore for this financial year. The earlier allocation for the year was Rs 4,900 crore.

The Rs 1,500-crore central allocation is to be available for states showing an accelerated reduction in commercial and line losses. The financial restructuring package specifies measures to be taken by state distribution companies (discoms) and state governments, restructuring their debt with TFM support.

Transitional central finance is to provide liquidity support through a grant equal to the value of the additional energy saved through loss reduction. States will be eligible only if the gap between the Average Revenue Realised (ARR) and the average cost of supply (CoS) is reduced by at least 25 per cent during a year over 2010-11.

The gap between ARR and CoS pushed up states' accumulated loss to Rs 2.4 lakh crore at the end of March 2012. With input cost rising at the back of fuel charges and revenue coming under constraints due to stagnant rates of supply, the gap rose to Rs 1.45 a unit (KwH) in 2009-10 from 76p in 1998-99. Also, the combined debt of all discoms reached Rs 1.9 lakh crore in March 2012, as more and more distributors opted for loans to meet even operational costs. Despite their stated willingness to reform distribution, states are yet to formally accept the FRP.

As for the RGGVY, it was launched in 2005 to electrify around 100,000 villages and provide power connections to 24.4 million rural below-poverty-line households. The ministry achieved the revised targets under the Bharat Nirman Programme to electrify 100,000 villages in December 2011. In the coming year, it wants to cover electrification of another 6,000 villages.

Overall, the ministry is seeking an eight per cent higher plan outlay for budget 2013-14. It has proposed Rs 58,967 crore as compared to the revised estimate of Rs 54,696 crore for 2012-13. The proposed outlay includes Rs 50,900 crore for its public sector undertakings, with most of this to be raised by the companies internally.

NTPC, largest power generator in the country, has proposed an outlay of Rs 20,200 crore against the 2012-13 revised estimate of Rs 20,900 crore, NHPC has proposed Rs 3,148 crore against Rs 2,967 crore and Powergrid has proposed Rs 20,000 crore, the same as the current financial year's revised estimate.

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