Focus Changed From Generation Of Power To Transmission
The major announcement made by Union Finance Minister Yashwant Sinha in the Budget 2002-03 is the increased allocation of Rs 3500 crore to the states for undertaking power sector reforms. Change in focus is obvious-from generation to transmission and distribution.
The previous state sector reforms scheme - the accelerated power development programme (APDP) - has now been re-christened as the accelerated power development and reform programme (APDRP). The availability of funds under the new APDRP scheme will once again be linked to the implementation of reforms by the states.
An allocation of Rs 1500 crore was made by the finance minister last year under the APDP scheme.
Given the commercial health of state electricity boards (SEBs), the finance minister has rightly linked funding under this scheme with the reforms to be initiated by the states. Towards this, a high-level monitoring group will be constituted oversee the progress of the APDRP. The minister said the allocation for the programme would be augmented by loans on concessional terms from the Power Finance corporation (PFC).
Not surprising though, the average rate of return for all SEBs is about minus 40 per cent and their combined losses continue to increase. In this backdrop, the emphasis on reforms on the distribution side is justified.
Sinha said that this is one of the foremost challenges not only in the power sector, but also for the fiscal health of the state governments and the overall performance of economy.
The ministry of power has already signed memoranda of understanding (MoU) with 20 states and is expected to complete the exercise with the remaining states soon.
States' access to the fund will be on the basis of agreed reform programmes, the centrepiece of which would be the narrowing and ultimate elimination of the gap between unit cost of supply and revenue realisation within a specified time frame. Mr Sinha has also urged the states to implement the "one-time settlement" scheme for clearing the outstandings of central power utilities as recommended by group of experts.
Alongside, the plan outlay for the year 2002-03 has been fixed at Rs 14,823.05 crore, which is mainly for schemes and projects of NTPC (Rs 3506 crore), NHPC (Rs 2467.7 crore), PGCIL (Rs 3312 crore) among others.
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