The ambitious Accelerated Power Development Programme and the Accelerated Power Development and Reform Programme, launched by the government to improve the power situation in the country, have run into trouble.

There have been complaints against the disbursement of funds under the schemes, as the states have used only a part of the money on the power sector. Also, counterpart funding from financial institutions is yet to be tied up by the states.

The Planning Commission, which periodically reviews the programmes, has pointed out that Maharashtra diverted funds meant for the programme. The commission also directed the power ministry to ascertain how Gujarat and Haryana -- the two other states that have reduced cash losses and consequently received funds from the government under the programme -- utilised the money.

As budgetary allocations for APDRP in 2004-05 will be based on the actual experience of the states in meeting the objectives of the programme, they may not receive funds in the next fiscal.

Even in the case of the APDP programme, underutilisation of released funds, over-funding by the Centre and lesser funds from financial institutions have been detected.

The APDRP, approved in March 2003, envisages an expenditure of Rs 40,000 crore (Rs 400 billion) during the Tenth Plan period (2002-07). The programme has two components, investment and incentive, with a 50:50 allocation.

The programme provides for a six-level intervention strategy for reforms in distribution and offers Rs 20,000 crore (Rs 200 billion) as Central Plan assistance to the state governments for upgradaing and modernising sub-transmission and distribution schemes under the investment component.

While the Centre is supposed to provide one half of the project expenses, the states are supposed to arrange the rest of the funds from financial institutions.

The balance Rs 20,00 crore (Rs 20 billion) has been provided to incentivise the states' power utilities for reducing cash losses.

The Plan body has pointed out that based on the numbers provided by the power ministry, incentives totalling Rs 379.27 crore (Rs 3.79 billion) have been released to the three states.

While the guidelines state that funds provided under the incentive scheme should be "utilised in improvement of the power sector only", Maharashtra withheld around Rs 138 crore (Rs 1.38 billion) due to the Maharasthtra State Electricity Board and the utility further used part of the funding it received to pay its coal dues.

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It has been further said that in case of special category states, where the Centre was to undertake 100 per cent of the project cost as financial assistance, the Centre had released 21 per cent of the project costs, whereas utilisation has only been 6.94 per cent. The rest of the funds have not been accounted for.

It has also been pointed out that in the absence of required information, the Planning Commission has repeated the 2002-03 state-wise allocation for 2003-04 also. This is at variance with the actual releases made by the power ministry.