The Planning Commission, last year, had announced setting up of NEF to finance the development of power transmission and distribution network by state utilities so as to reduce T&D losses.
The Plan panel has suggested that the government should provide interest subsidy aimed at bearing part of the interest cost by the Centre. For example, if a state utility plans to raise funds at 10% interest rate, 4% of that would be borne by the government.
"We have suggested that the (interest) subsidy should be based on the norms of the (state) utilities," Mr Chaturvedi said.
State-run Power Finance Corporation and Rural Electrification Corporation are likely to be the nodal agencies to finance state utilities.
The support of World Bank and Asian Development Bank could be sought for improving electricity transmission and distribution network in the country.
As per government estimates, power T&D losses in the country may exceed Rs68,000 crore by the end of the current financial year (2010-11).
Meanwhile, the power ministry is also mulling setting up of a fund for financing projects with a corpus of Rs50,000 crore.
The proposal is at a nascent stage and the ministry is yet to workout the modalities.