The Centre on Thursday approved an allocation Rs 17,033 crore for revamping a power sector reforms programme aimed at cutting commercial and other losses of state utilities.
The decision to restructure the Accelerated Power Development and Reforms Programme (APDRP) covering 571 projects in the first phase was taken by the Union Cabinet at its meeting in New Delhi.
"Out of the Rs 17,033 crore, the grant component is Rs 6,445 crore and the loan component is Rs 2,274 crore," Finance Minister P Chidambaram told reporters after the Cabinet meeting. He added that the loan would 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, Chidamabram said.
The government had approved APDRP in March 2003 to accelerate distribution sector reforms.
Besides reducing AT&C losses, the scheme seeks to bring commercial viability in the power sector and reduce outages and interruptions.
Under the scheme, the government provides 50 per cent central assistance for strengthening and upgrading sub-transmission and distribution network.
According to the Power Ministry, overall AT&C losses are around 35 per cent against about 39 per cent in 2001-02.