Power Finance Corporation (PFC), a state-owned NBFC under the Ministry of Power, signed a EUR 150 million loan agreement with Germany’s KfW Development Bank. The loan will be used to fund projects under the Revamped Distribution Sector Scheme (RDSS), aimed at modernising India’s electricity distribution system.
Key Highlights
- PFC and KfW have a long-standing partnership in India’s power distribution sector, reflecting India–Germany energy cooperation.
- This loan aligns with India’s vision of reliable, affordable, and sustainable power supply and supports energy transition goals.
Revamped Distribution Sector Scheme (RDSS) – At a Glance
Duration:
- FY 2021-22 to FY 2025-26. RDSS was launched in 2021 with an outlay of ₹3,03,758 crore (Central Govt. share: ₹97,631 crore).
Objective:
- Improve operational & financial efficiency of power DISCOMs, reduce AT&C losses to 12–15% and eliminate ACS-ARR gap by 2024-25.
Major Components:
- Part A: Financial support for prepaid smart metering, system metering & infrastructure upgradation.
- Part B: Training, capacity building & enabling activities.
Subsumed Schemes:
- Integrated Power Development Scheme (IPDS)
- Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY)
- PM’s Development Package 2015 for J&K (PMDP-2015)
Implementation: Assistance linked to reforms & meeting pre-qualifying benchmarks.
About Power Finance Corporation (PFC)
- Established: 1986
- Type: NBFC (Infrastructure Finance Company) under Ministry of Power, GoI
- Headquarters: New Delhi
- CMD: Parminder Chopra (first woman CMD of PFC, appointed 2023)
- Role: Major lender to India’s power sector (generation, transmission, distribution).
About KfW (Kreditanstalt für Wiederaufbau)
- Established: 1948 (post-World War II, as part of Marshall Plan reconstruction).
- Headquarters: Frankfurt, Germany.
- Ownership: 80% Federal Republic of Germany, 20% German States.
- Focus: Development finance, renewable energy, infrastructure, climate protection.
- Significance: Largest promotional bank in the world; actively funds India’s renewable & distribution sector projects.
Key Facts
- AT&C Losses: Aggregate Technical & Commercial losses in power distribution (reflect inefficiency & theft).
- ACS-ARR Gap: Difference between Average Cost of Supply and Average Revenue Realised by DISCOMs. Eliminating it ensures financial sustainability.
- DISCOMs: Power Distribution Companies responsible for last-mile electricity delivery.
- India–Germany Energy Partnership: Strong cooperation in renewable energy, green hydrogen, and sustainable finance.
- PFC Subsidiary: REC Limited (Rural Electrification Corporation) also plays a key role in funding power sector reforms.