RIL apathy throws water on Capex

The Rs 2400-crore capital expenditure (Capex) programme launched by the State Government in 2010 has failed to get the desired result due to lack of cooperation from the Reliance Infrastructure Limited (RIL) managed power distribution companies.

The Capex programme envisages an investment of Rs 2,400 crore in infrastructure development in the power distribution sector.

Under the programme, the Government will extend Rs 1,200 crore assistance to the distcoms in the shape of loan on the condition that Rs 666.67 crore will be converted into grants if the distcoms achieve a loss reduction target of three per cent per annum.

The distcoms are required to arrange 50 per cent of the cost. Of the total outlay of Rs 2,400 crore, Rs 468 crore will be invested in Wesco, Rs 504 crore in Nesco, Rs 492 crore in Southco and Rs 936 crore in Cesu areas.Though CESU has arranged counterpart funding from the Rural Electrification Corporation (REC), the REL-managed companies are yet to provide their share of fund.

Chief Minister Naveen Patnaik launched the Capex programme in October, 2010. The State Government has been making budgetary provision for infrastructure development programme, but project is languishing due to lack of support from REL managed distcoms.

Even as the State pioneered in power sector reforms more than a decade ago, the aggregated technical and commercial (AT&C) loss is over 40 per cent. With the high loss level, the distribution sector cannot be sustainable. The unsustainable loss level puts a huge strain on the distribution companies to invest in the system upgradation.

In order to revive the sector and make it viable, the Government approved the Energy Department proposal for an investment of Rs 2,400 crore in the power distribution sector.