Reform linked additional borrowing permissions are stimulating reforms in the power sector across the states.
As a part of the reform process, five more states -- Bihar, Goa, Karnataka, Rajasthan and Uttarakhand have successfully met the target set by the Power ministry for reduction in Aggregate Technical & Commercial (AT&C) losses or achieved the targeted reduction gap in Average Cost of Supply and Average Revenue Realisation (ACS-ARR).
Reduction in AT&C losses and ACS-ARR gap are two of the three reforms in Power Sector stipulated by the Department of Expenditure, Ministry of Finance.
A part of additional borrowing ceiling to the states is linked to undertaking reforms in the power sector.
States get permission to borrow and amount equivalent of 0.05 per cent of the Gross State Domestic Product (GSDP) for meeting the target set for the state for reduction in AT&C losses and additional 0.05 per cent of GSDP for crossing the ACS-ARR gap target.
Uttarakhand has achieved the targets for reduction in both AT&C losses and ACS-ARR gap. AT&C losses in the state have reduced to 19.01 per cent against the target of 19.35 per cent. ACS-ARR Gap in the state has been reduced to Rs 0.36 per unit against the target of Rs 0.40 per unit.
Goa has brought down the AT&C losses to 11.21 per cent against the target of 13.53 per cent.
Karnataka has surpassed the ACS-ARR Gap target of Rs 0.50 per unit by reducing the gap to Rs 0.44 per unit.
Rajasthan has also achieved the ACS-ARR Gap reduction target. Against the target of Rs 1.40 per unit, the state has abridged the gap to Rs 1.16 per unit.
Similarly, Bihar has also achieved the ACS-ARR Gap reduction target by 10 per cent reductions in the ACS-ARR Gap.
Successful implementation of the reform has made these five states eligible to mobilise additional financial resources of Rs 2,094 crore. The permission for the same has been accorded by the Department of Expenditure.
This has provided the much needed additional financial resources to the states to fight Covid-19 pandemic, enhance capital expenditure to stimulate demand.
Besides these five states, Andhra Pradesh and Madhya Pradesh have undertaken the third reform in the power sector i.e. Direct Benefit transfer (DBT) of electricity subsisdy to farmers. Consequently, these two states were given additional borrowing permission of Rs 2,938 crore, equivalent to 0.15 per cent of their GSDP.
Thus, the 7 states who have undertaken power sector reforms so far have been granted additional borrowing permission of Rs 5,032 crore.