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$250 million World Bank Loan for electricity sector in Rajasthan

Staff writer ▼ | March 29, 2016
The World Bank Board approved a $250 million development policy loan (DPL) to support Rajasthan in improving the performance of its electricity distribution sector under the State’s 24x7 Power for All program.
India   24x7 Power for All program
The First Programmatic Electricity Distribution Reform Development Policy Loan for Rajasthan will be the first in a series of two operations for a comprehensive turnaround of Rajasthan’s electricity distribution sector.

The distribution companies (DISCOMs) in Rajasthan provide electricity to about 9.5 million customers. However, a combination of high generation costs, inefficiencies in the distribution sector and an accumulation of long-delayed tariff adjustments has resulted in several years of continuing losses for the DISCOMs leading to a total outstanding debt of Rs 780 billion as on July 2015.

Last year the Government of India (GoI) announced the Ujwal DISCOM Assurance Yojna (UDAY) program to find a sustainable solution to the financial troubles facing almost all DISCOMs across states.

This operation will align with the UDAY program of GoI as well as that of the Rajasthan government’s plans to improve the financial, operational and technical performance of its DISCOMs.

The state has issued and notified the Electricity Distribution Management Responsibility Ordinance – the first of its kind for any Indian state – which provides for financial restructuring, long-term planning, corporate governance, regulatory compliance and policy directives.

The state government will also lay out clear performance targets with the management of the DISCOMS for better accountability in the sector for which annual Memorandum of Understandings (MoUs) will be signed between the state government and each of the three DISCOMs.

The DISCOMs have also developed their Employee Performance Incentive Schemes that provides for a financial incentive to employees based on their performance in reducing Aggregate Technical and Commercial (AT&C) losses in their respective sub-divisions.

The state and the DISCOMs have entered into tripartite MoUs with GoI for the implementation of the UDAY program. The state has also set up the Rajasthan Energy Development Corporation Ltd, a company expected to optimize power purchases on behalf of DISCOMS.