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REC – Powering up

According to reports, Rural Electrification Corporation (REC) continued to register higher growth and record performance for 2012-13, in key areas of disbursements of loans, recoveries, operating income and profits. A sum of Rs 40,183 crore was disbursed during the financial year 2012-13 as against Rs 30,593.30 crore in the previous year. Non-performing assets (NPAs) continued to be at low levels.

The total operating income for the financial years 2012-13 increased by 30% to Rs 13,518.86 crore from Rs10,423.75 crore in the previous year. The profit after tax increased to Rs 3,817.62 crore, up by 35%, from Rs 2,817.03 crore in the previous year.

A record 20,623 MW was added to the installed capacity in 2012-13 against a capacity addition target of 17,956 MW witnessing a growth of 15 per cent. The majority addition came from the thermal stream, accounting for around 98 per cent of the total capacity addition during the fiscal of which capacity addition from the private sector was 11,188 MW. At the end of the first year of the 12th Plan, the total installed generation capacity stands at 223.34 GW which was 11.7 per cent more than that at the end of the Eleventh Plan. Renewable energy has seen an unprecedented growth towards the end of the XI Plan. The share of renewable energy is an indication of the major shift imminent in the fuel mix for generation sources in the country.

The Twelfth Plan targets for power envisage capacity addition of 88,425 MW. The funds requirement for the power sector for Plan period has been estimated at around Rs 14 lakh crore. For the XIII Plan, Planning Commission estimates that in order to meet the projected demand requirement by 2022 at a GDP growth rate of 9 per cent, capacity addition of 94,000 MW would be required along with matching expansion required in transmission and distribution systems.

The power generation has grossly suffered owing to shortage of coal and failure to achieve the planned targets from captive coal mine blocks. Distribution sector, the revenue generating link in the generation-transmission-distribution chain, is clearly the weakest link in the power sector value chain and is threatening to derail the entire process of reforms as also jeopardise India’s growth story.

While the power generation sector is struggling to meet the burgeoning demand, the distribution sector has been reeling under losses and has been in focus with various measures being taken by the Centre to make the State discoms/utilities viable.

To turn around State discoms and ensure their long-term viability, a financial restructuring scheme for the State-owned discoms, viz., Transitional Finance Mechanism (TFM) has been formulated by the Government.

The mechanism includes measures such as approval of financial restructuring plan (FRP) from the State Government and the respective State Electricity Regulatory Commission (SERC), revision of tariff, thereby reducing the gap between average revenue realised (ARR) and average cost of supply (ACS), release of subsidies only to State Governments to be later adjusted in the ARR, posting of Audited Accounts on regular basis, incentivisation through technology interventions in R-APDRP and NEF, devising utility-wise turnaround plan and monitoring its implementation at the highest level.

For the Twelfth Plan, the Planning Commission estimates investment of Rs 3.14 lakh crore for the sector, inclusive of restructured accelerated power development and reforms programme and the Rajiv Gandhi Grameen Vidyutikaran Yojana schemes.

The R-APDRP scheme seeks to address the twin issues of the SEBs /discoms, namely, limited resource availability and obsolete technology.

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