Power sector could face fund shortage of over Rs 400K cr

“Though most states have unbundled their electricity boards and are firmly inching towards 100 per cent metering,yet there was a strong case for encouraging separation of feeder lines besides expediting structural reforms in the remaining states. As of now,23 states have set up their regulatory commissions and as many have achieved 100 per cent metering at 11 KV feeder level. Fifteen states unbundled their electricity boards,” it pointed out.

In the power generation sector,the committee argued that while the Central power PSUs have reasonably strong balance sheets and secure internal and external budgetary resources to meet their requirements,states continue to suffer from poor financial reporting standards,“which might not inspire commercial banks and multi-lateral agencies to lend money to them”.

Consequently they remain dependent on funding from the Power Finance Corporation and the Rural Electrification Corporation. The sub-committee has,therefore,recommended that the India Infrastructure Finance Company Limited (IIFCL) be allowed to lend up to $5 billion to PFC and REC from the forex reserves.

The sub-committee also suggested allowing these two PSUs to issue power bonds or Vidyut Vikas Patra. Pitching strongly for operationalising the National Electricity Fund (NEF),the sub-committee suggested,“funds mobilised through disinvestments in the power sector CPSUs could be transferred to the NEF for development of transmission and distribution system in the country”. In the backdrop of poor metering and inadequate accounting practices,the panel has sought providing Electricity Subsidy Coupons. or smart cards.