Additional resources of Rs. 7,309 crore made available to States for undertaking power sector reforms

Department of Expenditure, Ministry of Finance has granted additional borrowing permission of Rs. 7,309 crore to two States for undertaking the stipulated reforms in power sector. While, Rajasthan has been allowed to borrow additional Rs. 5,186 crore, Andhra Pradesh has been allowed to borrow additional Rs. 2,123 crore as incentive to embark on the reform process.

Ministry of Finance, based on the recommendations of the Fifteenth Finance Commission, has decided to grant additional borrowing space of upto 0.5 percent of the Gross State Domestic Product (GSDP) to the States every year for a four year  period from 2021-22 to 2024-25 based on reform undertaken by the States in the power sector. This was announced by the Finance Minister in the Budget speech of 2021-22. This will make available additional resources of more than Rs. 1 lakh crore every year to the States. The objectives of the additional borrowing permissions are to improve the operational and economic efficiency of the sector, and promote a sustained increase in paid electricity consumption.

In order to avail additional borrowing space linked to Power sector reforms, the State government has to undertake a set of mandatory reforms and also meet stipulated performance benchmarks. The reforms to be carried out by the States are –

  • Progressive assumption of responsibility for losses of public sector distribution companies (DISCOMs) by the State Government.
  • Transparency in the reporting of financial affairs of power sector including payment of subsidies and recording of liabilities of Governments to DISCOMs and of DISCOMs to others.
  • Timely rendition of financial and energy accounts and timely audit. 
  • Compliance with legal and regulatory requirements.

Once, the aforesaid reforms have been undertaken by the State, the performance of the State is evaluated on the basis of the following criteria to determine the eligibility for additional borrowing in 2021-22

  • Percentage of metered electricity consumption against total energy consumption including agricultural connections
  • Subsidy payment by Direct Benefit Transfer (DBT) to consumers
  • Payment of Electricity bills by Government Departments and local bodies
  • Installation of prepaid meters in government office
  • Use of Innovations and Innovative technologies

In addition, States are also eligible for bonus marks for privatization of the power distribution companies.

The Ministry of Power is the nodal Ministry for assessment of performance of States and determining their eligibility for granting additional borrowing permission. Apart from Rajasthan and Andhra Pradesh, nine other States, namely Assam, Goa, Kerala, Manipur, Meghalaya, Odisha, Sikkim, Tamil Nadu and Uttar Pradesh have also submitted their proposals to the Ministry of Power, which are under examination. Additional borrowing permission will be issued to eligible States on receipt of recommendation from the Ministry of Power.



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Joint Statement by Canada’s Minister of Natural Resources and the Saskatchewan Minister of Energy and Resources Following the Energy and Mines Ministers’ Conference

Canada’s Minister of Natural Resources, the Honourable Seamus O’Regan Jr., and Saskatchewan’s Minister of Energy and Resources, the Honourable Bronwyn Eyre, today released the following joint statement on the 2021 Energy and Mines Ministers’ Conference:

We had the pleasure to meet virtually today with our provincial and territorial counterparts, as part of ongoing sessions ahead of the 2021 Energy and Mines Ministers’ Conference, which is currently planned for Saskatoon in September.

As governments across Canada continue to address the challenges of the COVID-19 pandemic and focus on economic recovery, we are working together to support our natural resource sectors. 

These efforts have resulted in a number of new programs with three clear aims: to support jobs in the natural resource industries, advance innovative energy development and strengthen Canada’s competitiveness, including through reducing emissions and combating climate change.

In particular, we noted progress today on: investments to remediate inactive and orphan wells; funding the Targeted Geoscience Initiative and the Geo-mapping for the Energy and Minerals Program; and the new Emissions Reduction Fund, as well as direct support for workers in the oil and gas sector, including in Indigenous communities.

We also discussed the ongoing implementation and progress to date of key priorities that were identified at our last Energy and Mines Ministers’ Conference meeting. These include our work on small modular reactors, a Hydrogen Strategy and initiatives under the Canadian Minerals and Metals Plan. For this last initiative, a federal-provincial-territorial task team was established and is currently developing a Canadian critical minerals inventory to build an integrated, all-Canadian critical minerals and battery value chain.

We also discussed the long, successful tradition of collaboration between the United States and Canada, including in the areas of energy, mining and natural resources. The future of these sectors depends on a coordinated and successful approach to working with the new U.S. administration and on emphasizing the importance of energy infrastructure, including the more than 70 pipelines that cross our common border.

We look forward to building on our successes with our provincial and territorial counterparts as we work together to create a strong, sustainable energy future for Canada.