Press Information Bureau

Government of India

Ministry of Power

13-December-2012 16:55 IST

The Minister of State (Independent Charge) for Power Shri Jyotiraditya Scindia informed Lok Sabha today that 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 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.

For financial assistance from NEF (Interest Subsidy) Scheme, States have been categorized as “Special category and focused states”, and “States other than special category and focused States”. The preconditions for eligibility are linked to reform measures taken by the States and the amount of interest subsidy is linked to the progress achieved in reforms linked parameters. The objective of the NEF scheme is to expedite investment in distribution sector to improve infrastructure and to incentivize the reform process in the sector. Projects under the scheme received from States are yet to be sanctioned.

Government of Madhya Pradesh has requested the Ministry to consider the interest subsidy on the disbursements of loans by Rural Electrification Corporation Limited (REC) during the years 2012-13 and 2013-14 for the purpose of feeder distribution scheme of Madhya Pradesh.

NEF Guidelines stipulate that projects sanctioned by lenders shall be considered by Steering Committee during FY 2012-13 and FY 2013-14 provided no disbursement has been made by the lender under these projects prior to submission of proposal to the Steering Committee. Feeder distribution schemes of Madhya Pradesh were sanctioned in FY 2010-11 and disbursements of the fund for schemes have also started. Accordingly, these Schemes of Madhya Pradesh are not eligible under NEF.

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UM/KM

Interest subsidy scheme: eligibility tied to state reform progress; projects with prior disbursements are excluded under NEF. The National Electricity Fund (Interest Subsidy Scheme) provides interest subsidies to state power utilities for distribution improvement, with eligibility and subsidy amount linked to state classification and progress on reform-linked parameters; only projects with no lender disbursements prior to proposal submission will be considered by the Steering Committee, so earlier-sanctioned and disbursed feeder schemes are ineligible under NEF Guidelines.