The Hindu Business Line : PFC, French co, UN eyeing rural electrification pie

THE Government's renewed push to rural electrification in the 2005-06 Budget has evoked considerable corporate interest, with players as varied as Electricite de France (EDF), Power Finance Corporation (PFC) and even the United Nations among those looking at the rural electrification business.

EDF is working on participating in off-grid rural energy programmes in the remote areas where connectivity from the grid is not expected in the medium to long term. Different energy solutions including diesel, mini-hydro, wind, LPG and biomass are under consideration for local generation and distribution and the company is reportedly bringing in its own money, industry sources said.

EDF already has over four rural energy programmes running in Africa and others in development in Asia, which are based on long-term concessions and a fee-for-service model.

The UN, through its agencies, has also earmarked around $30 million for development of micro-hydel project in villages in Himachal Pradesh and Uttaranchal, industry sources said. The UN is also supporting NGOs working in the area.

The state-owned PFC has also chalked out plans to have a larger presence in rural financing. "We are looking at entering the rural electrification business in a big way. A comprehensive rural package is already under formulation. This is in line with our vision to be a complete financial service provider for the power sector," a PFC official said.

PFC would target funding to the tune of Rs 5,000 crore over a period of five years in the rural sector. The state-owned Rural Electrification Corporation (REC) is already a big player lending almost exclusively to the rural sector.

To provide an impetus to rural electrification, the Government had made an allocation of Rs 1,100 crore in the 2005-06 Budget for distributing electricity to households in 1.25 lakh villages. The programme envisages the creation of a rural electricity distribution backbone with a 33/11 kV substation in each block and, more importantly, having at least one distribution transformer in each village over the next five years.

According to the National Electricity Policy, which was announced in January this year, the Government aims to extend grids to all rural households without electricity over the next five years and to provide power on demand by 2012.

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