The Hindu Business Line : Fund to plug power sector investment gap likely

New Delhi April 19 The Centre is looking at a proposal to ring-fence money raised through divestment in power PSUs into a fund to be used specifically for plugging the investment gap in the power sector during the current Plan period.

The Government, which is currently in the process of offloading 5-10 per cent in National Hydroelectric Power Corporation (NHPC), Power Grid Corporation of India Ltd (PGCIL) and Rural Electrification Corporation (REC), estimates that up to 15,000 crore can be raised during the Plan period through offers for sale in power PSUs and follow-on public issues of listed undertakings.

"In view of the paucity of funds for investment in the generation, transmission and distribution sectors during the Plan period, several options are being looked at," a Government official said.

"If there is an offer for sale coupled with a raising of fresh equity in a power PSU, earmarking funds raised through the offer for sale for plugging the investment gap in the sector is possible."

NHPC and PGCIL have already filed their prospectuses with the SEBI to go ahead with their IPO involving offer for sale of five per cent of Government equity.

The Cabinet has cleared sale of 10 per cent stake in REC.

The UPA Government's Common Minimum Programme (CMP) provides for revenues from the public sector divestment process to be channelled into a National Investment Fund meant to finance social sector schemes and capital investments by PSUs.

According to Planning Commission estimates, the sector would require Rs 10,31,600 crore to achieve generation capacity addition target of over 70,000 MW during the current Plan period, along with corresponding investments in upgrading transmission and distribution systems.

The report of the Working Group on Power for the 11th Five-Year Plan projects a shortfall of Rs 4,51,607 crore in the fund estimates for the sector.

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