Capital Expenditure (CAPEX) Programme for improvement of T&D System

Objective: To improve the T&D infrastructure of the state for enhanced quality and reliability of power supply to customers.

The entire electrical network was as old as 30-35 years by the time it was privatized in 1999. Most of the electrical networks are now almost 45 years old. After privatization of power sector, government subsidy has been withdrawn and no transitional support has been given to the sector. As a result, there has been no infusion of funds to the distribution sector leaving the distribution network in a dilapidated condition. Since the period of reforms the consumer base has been doubled from 13 lakhs in 1999 to 26 lakhs in 2008-09 and the input drawl of energy has increased from 10000 MU in 1999-2000 to 20000 MU in 2008-09. The necessity of restructuring of infrastructure in distribution sector is felt. Keeping in view, the Sovan Kanungo Committee on review of power sector reforms had recommended financial support of 3240.00 crore. The Odisha Electricity Regulatory Commission has also approved the business of the DISCOMs for the period 2008-09 to 2012-13 with investment of 5000.00 crore by the Year 2013 by both Govt. of Odisha and DISCOMs. With a view to support the power distribution sector, the Government of Odisha placed a proposal before 13th Finance Commission for a grant of 500 crore.

Funds flow arrangement: The Government of Odisha with an objective to improve the infrastructure of power distribution system has approved a proposal for 2400 crore in distribution sector including the financial support of 13th Finance Commission at 500 crore. The aforesaid amount was meant to be spent within a stipulated period of four years starting from 2010-11 to 2013-14 but as per the revised programme the period has been extended up to five years i.e. from 2011-12 to 2015-16, out of which, Government of Odisha will provide 1200 crore and DISCOMs will invest 1200 crore from their own source / or through market borrowings as per the original schedule . The State Government have made a plan provision of 135 Crore in the F.Y. 2014-15. By September,2014 Government of Odisha have released 680.83 crores to the DISCOMS.

(Rs. In Crore)
Sl No. Sources Financial year
2011-12 2012-13 2013-14 2014-15 2015-16 Total
A State Govt. Funding
1 Financial Commission Grant(FCG) 125.00 125.00 125.00 125.00 - 500.00
2 1/3rd matching share of State Govt. to FC Grant 20.00 - 73.33 73.34 - 166.67
3 1/3rd matching share of GRIDCO (State Govt.) to FC Grant 20.00 - 73.33 73.34 - 166.67
4 States own Contribution 255.83 10.00 50.00 50.83 - 366.66
Sub-total (1+2+3+4) 420.83 135.00 321.66 322.51 - 1200.00
B DISCOMs Counterpart Funding
5 1/3rd DISCOMs share to FC Grant - - 83.34 83.33 - 166.67
6 DISCOMs own Contribution - - - 133.33 900.00 1033.33
Sub-total (5+6) - - 83.34 216.66 900.00 1200.00
C Total (A+B) 420.83 135.00 405.0 539.17 900.00 2400.00

The CAPEX programme has been rescheduled vide Government Of Odisha Notification No.6603,Dt. 08.08.2013 and the reschedule goes as follows:-

Out of the State government Support of 1200 crore;

  1. Grant of 500 crore from 13th F.C. is to be initially passed on as loan with 0% interest.
  2. 166.67 crore of matching State share against 13th F.C. grant as loan with 0% interest.
  3. 166.67 crore of Loan to GRIDCO for 1/3rd counterpart funding to F.C. Grant with 4% interest.
  4. 366.66 crore as budgetary support in shape of soft loan with 4% interest.

Loan of 666.67 crore bearing 0% interest may be considered for conversion in to grant after full utilization of the loan for the specified purpose and achievement of loss reduction target of 3% p.a.

Implementation Status: The State Government budgetary support along with 13th Finance Commission Grant amounting to 1200 crore will be invested in CAPEX programme along with the balance fund of 1200 crore to be provided by the GRIDCO and distribution company. The Government of Odisha will provide loan to GRIDCO and GRIDCO on on-lending basis provides funds to the DISCOMs. The DISCOMs have to prepare the detailed project reports of their own which will be approved by the OERC and the Project Monitoring Committee. The DISCOMs shall have to reduce the AT & C loss @ 3% p.a. in the project area during the implementation period. In order to incentivize the DISCOMs to perform efficiently & effectively 666.67 crore zero interest bearing loan shall be convertible to grant on pro rata basis subject to achievement of AT&C loss reduction target of 3% per annum and after full utilization. The loan of 666.67 crore carrying zero percent interest consists of 500 crore FC grant & 166.67 crore, State Government Counterpart funding to FC grant. The conversion would take place over a period of five years The first year would be the year starting after one year following the year of disbursement of each tranche of loan.

Project Monitoring Mechanism:GRIDCO acts as Nodal Agency for implementation of the project under the overall guidance of the Energy Department. It co-ordinates with agencies involved such as Energy Department, Finance Department, Government of Odisha, DISCOMs and the Monitoring Committee in the matter of sanction of DPRs, release of funds, monitoring and use of loan and recovery of principal and interest through a suitable ESCROW mechanism. The Project Monitoring Committee consists of Principal Secretary, Energy Department, Government of Odisha as Chairman, representatives of Finance Department, representative of P & C Department, Govt. of Odisha, Managing Director, GRIDCO, Chief Electrical Inspector, T&D, MD/CEO/VP of DISCOMs, Financial Advisor, Department of Energy, Govt. of Odisha as Members and Addl. Secretary / Joint Secretary as the Convener. The Project Monitoring Committee reviews the progress of work time to time for timely completion of the project.

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