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GOVERNMENT OF INDIA Ministry of Power
RAJYASABHA UNSTARRED QUESTION N0.4160 TO BE ANSWERED ON MAY 14, 2012 National Electricity Fund
Will the Minister of POWER be pleased to state:
(a) whether it is a fact that Government has decided to create a National Electricity Fund to give subsidized credit to the power sector in the country, including power distributing companies;
(b) if so, the details thereof; and
(c) by when the Fund would become operational?
ANSWER THE MINISTER OF STATE IN THE MINISTRY OF POWER (SHRI K.C.VENUGOPAL)
(a) & (b): Yes, Sir. Cabinet Committee on Economic Affairs (CCEA) has approved the setting up of National Electricity Fund (Interest Subsidy Scheme) to provide interest subsidy aggregating to Rs: 8466 Crores to be given during the tenure of loan on loan disbursement amounting to Rs: 25,000 Crores to the State Power Utilities- both in public and private sector, to improve the distribution network. The objective of the NEF scheme is to incentivize the investment in distribution sector to improve the infrastructure and to expedite the reform process in the sector. There will 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 amount of interest subsidy is linked to the progress achieved in reforms linked parameters. Based on the progress achieved on these parameters, the utilities will be eligible for subsidy in interest rates from 5% to 7% in "Special Category and focused states" and 3% to 5% in States "other than Special category and focused states". The main reform parameters are:
AT&C loss reduction, reduction in the ARR (Average Revenue Realized per unit) and ACS (Average Cost of Supply per unit) gap.
(c): The Guidelines for operationalization of the NEF Scheme is under finalization in Ministry of Power.