Government inks $250 million loan agreement World Bank for Electricity Distribution Sector Reforms in Rajasthan

August 29, 2018

Central Government along with Government of Rajasthan has signed $250 million Development Policy Loan (DPL) agreement with World Bank for Electricity Distribution Sector Reforms in Rajasthan. The loan will be provided by World Bank’s lending arm International Bank for Reconstruction and Development (IBRD). It has maturity of 21 years and 3-year grace period.

Electricity Distribution Sector Reforms Program

The loan proceeds will support Rajasthan Government in improving performance of its electricity distribution sector under State’s 24×7 Power for All program. This loan was second in the series of two operations planned for comprehensive turnaround of Rajasthan’s electricity distribution sector. The first loan was closed in March 2017.
Key areas of reforms program

Strengthen Governance in Distribution Sector in state by establishing Annual Performance MoUs between DISCOMs and the State Government.
Put in place Performance Management System.
Provide incentives to employees for improving performance.
Financial Restructuring and recovery in Sector by transferring considerable amounts of DISCOMs debt to State.
Bring in more discipline in revenue requirements of DISCOMs.
Take initiatives in reducing the costs of energy procurement.
Improve operational performance of DISCOMs through initiatives like publishing feeder level energy audits and increased usage of IT among others.

Significance

This program is aligned to Broader Reform Program developed by Central Government and adopted by Rajasthan Government to improve performance of DISCOMs in the State. This will contribute to state’s fiscal sustainability and achieve objective of 24×7 Power for All initiative, which aspires to provide continuous, reliable power supply to all households in Rajasthan by 2019. It will also help to deepen Institutional and Operational Reforms that were launched in late 2015 centered around Central Government’s Ujwal DISCOM Assurance Yojna (UDAY), for which Rajasthan had joined in 2016. It also supports Rajasthan State Electricity Distribution Management Responsibility (RSEDMR) Act, which aims to reform the Governance of DISCOMs and bring greater public accountability in their functioning. The improved financial health of DISCOMS through these initiatives will help to free-up state’s resources for spending on social sectors, allowing for businesses to grow and jobs to be created.

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