By TIOL News Service

NEW DELHI, FEB 19, 2021: THE Finance Ministry on Friday said it has granted reform-linked additional borrowing permission of Rs. 2,094 crore to Bihar, Goa, Karnataka, Rajasthan and Uttarakhand for implementing two of the three reforms in the power sector as stipulated by the Department of Expenditure.

The ministry said that the five States have "successfully met the target set by the Ministry of Power for reduction in Aggregate Technical and Commercial (AT&C) losses or achieved the targeted reduction in Average Cost of Supply and Average Revenue Realisation (ACS-ARR) gap."

Uttarakhand has reduced AT&C losses to 19.01 per cent against the target of 19.35 per cent and the ACS-ARR gap has been reduced to Rs. 0.36 per unit against the target of Rs. 0.40 per unit. Similarly, Bihar has also achieved the ACS-ARR gap reduction target by 10 per cent reductions.

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 AT&C losses of Rs. 0.50 per unit by reducing the gap to Rs. 0.44 per unit. Rajasthan has also achieved the AT&C loss reduction target, bringing it down to Rs. 1.16 per unit against Rs. 1.40 per unit.

"Successful implementation of the reform has made these five States eligible to mobilise additional financial resources of Rs. 2,094 crore," said the ministry, adding a part of the additional borrowing ceiling is still pending.

Besides this, Andhra Pradesh and Madhya Pradesh have also undertaken the third reform in the power sector, which is the Direct Benefit transfer (DBT) of electricity subsidy to farmers.

The power sector reforms aim at creating a transparent and hassle-free provision of power subsidy to farmers and prevent leakages. They also look at improving the health of power distribution companies by alleviating their liquidity stress in a sustainable manner.

Thus, the seven States who have undertaken power sector reforms so far have been granted additional borrowing permission of Rs. 5,032 crore: Andhra Pradesh (Rs. 1,515 crore), Bihar (Rs. 323 crore), Goa (Rs. 44 crore), Karnataka (Rs. 901 crore), Madhya Pradesh (Rs. 1,423 crore), Rajasthan (Rs. 546 crore) and Uttarakhand (Rs. 280 crore).

In view of the resource requirement to meet the challenges posed by the COVID-19 pandemic, the government had increased the borrowing limit of the States by 2 per cent of their GSDP in May last year, and linked part of it to them undertaking citizen-centric reforms in One Nation One Ration Card system, ease of doing business reform, urban local body/utility reforms and power sector reform.

Till now, 21 States have carried out at least one of the four stipulated with the government having issued additional borrowing permission of Rs. 91,667 crore so far.