The government’s proposed Rs 1,00,000-crore National Electricity Fund will go for Cabinet approval after the expenditure finance committee gives its go-ahead.
“We have sent the proposal to the expenditure finance committee for their approval. After that ...it would go to the Cabinet,” said BK Chaturvedi, member, Planning Commission.
The Planning Commission, last year announced setting up of the electricity fund to finance the development of power transmission and distribution network by state utilities so as to reduce transmission and distribution losses.
The Plan panel has suggested that the government should provide interest subsidy aimed at bearing part of the interest cost by the Centre. For example, if a state utility plans to raise funds at 10 per cent interest rate, four per cent of that would be borne by the government.
State-run Power Finance Corp and Rural Electrification Corp are likely to be the nodal agencies to finance state utilities.
The support of World Bank and Asian Development Bank could be sought for improving electricity transmission and distribution network in the country.
According to government estimates, power T&D losses in the country may exceed Rs 68,000 crore by the end of 2010-11.
Meanwhile, the power ministry also plans to set up a fund for financing projects with a corpus of Rs 50,000 crore. The proposal is at a nascent stage and the ministry is yet to workout the modalities.