New Delhi, Dec 13: The federal cabinet Tuesday approved setting up a national electricity fund to provide interest subsidy amounting to Rs.8,466 crore aimed at improving the power distribution network in the country.
The cabinet committee on economic affairs, headed by Prime Minister Manmohan Singh, cleared the proposal which would become ‘operational within a period of 6 to 12 months’.
The interest subsidy will be provided on the loans ranging to a period of 14 years for projects of electricity distribution sector.
The new interest subsidy scheme called National Electricity Fund is being set up to provide interest subsidy on loans to be disbursed to the distribution companies – both in the public and private sector, to improve the distribution network for areas not covered by Rajiv Gandhi Gramin Vidyutikaran Yojana and Restructured Accelerated Power Development and Reforms Programme.
‘The preconditions for eligibility are linked to certain reform measures taken by the states and the amount of interest subsidy is linked to the progress achieved in reforms linked parameters,’ according to official statement released after the cabinet meeting.
The nodal agency for the national electricity fund will be Rural Electrification Corporation Ltd.