With government granting infrastructure finance company (IFC) status to Rural Electrification Corporation (REC), its  exposure to private sector will increase from 35% to 40% . ECBs  of  upto  500 million dollars will not require RBI approval and it will  be able to raise infrastructure bonds interest rate below G Sec  rates.

In a press conference held in Mumbai, Jairaj Phatak , chairman and managing director, Rural Electrification  Corporation while addressing the media  said,  “In future , we will raise  1 billion dollars of ECB’s . The bulk will come from regular bonds. Infrastructure  bonds and  1000 crore of tax free bonds  will be another source of borrowings .We have already  raised  400 million dollars from east and south east Asian markets.  A similar amount may be raised from European markets.”

Answering  a question on why electricity is not reaching all regions  Phatak said, ‘Each  MW requires an investment of 5 crores to take electricity to every region.  Transmission and development ( T&D ) requires another 5 crores. Weak states did not have funds and administrative skills to afford this.”

On demand -supply gap Phatak  added, “10-15% gap in demand supply will continue.  If we can install 1 lakh MW in the 12th plan  the demand supply gap will come down. Though  power generation has become attractive , new and renewable sources and transmission and distribution are not  financially attractive to public sector banks.”’

“Electricity pilferage is steadily coming down . Transmission and Distribution losses (commercial losses ) are coming down by 1% per annum on an average . In  Bhiwandi town a sizeable reduction in  electricity pilferage has been achieved . It is a steady process  and with more improvements  we should be able to arrest 10%  pilferage like South Korea  has done .Regular power supply  brings down  electricity thefts.”

Answering a question on increasing  REC  exposure to decentralized power , Phatak replied,  “Decentralised Distribution Generation  is only going to  be  effective when the village is not grid connected, else benefits of RGGY are not available. In Chhattisgarh there is a potential of 1112 projects, the target this year is 7. CREDA  has already prepared 44 Detailed Project Reports . In  Madhya Pradesh 50 DPR’s have been prepared by MPUVN against a target of 6. In Rajasthan against target of 3, JVVN is preparing the DPR . Similarly there is potential  in  J&K and Gujrat . In Maharashtra we feel most villages can be grid connected in the next three years. In Arunachal , MRNE  has taken up small hydel projects so they do not want our DDG.”