The Planning Commission has proposed setting up of a National Electricity Fund to generate resources for improving power distribution network in the country.
The proposal will form part of the Eleventh Five Year Plan (2007-12), which is likely to be placed before the full Planning Commission for its approval on November 8, sources said in New Delhi.
The proposals for the power sector in the Eleventh Plan, currently being finalised by the Commission, will include augmenting the country's power generating capacity by 80,000 MW, setting up of peaking power stations and providing level playing field to private operators.
The total funds required for sub-transmission and distribution during the Plan period, which includes the Accelerated Power Development and Reforms Programme scheme, is estimated at Rs 3,09,177 crore (Rs 3,091.77 billion).
In addition, the government also plans to float power bonds -- Vidyut Vikas Patra to mobilise Rs 50,000 crore (Rs 500 billion)
to finance various projects in the sector under the Eleventh Plan period. The VKP to be floated on the lines of the Kisan Vikas Patra will have a lock-in period of five years.
The power ministry, in its presentation to the Commission on proposals for the Eleventh Plan, has suggested that the government should grant priority sector lending status to power projects and raise the income tax exemption limit for investment in infrastructure bonds from Rs 100,000 to Rs 1,50,000.
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