Aims to boost power utilities’ efficiency

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved a five-year-long reform-based power distribution scheme worth Rs 3.03 lakh crore for strengthening system of utilities to improve efficiency.

Briefing the media after the CCEA meeting here, Power and New & Renewable Energy Minister RK Singh said, “We have done a lot for power distribution reforms. It needs to be strengthened. Today, the Cabinet has approved the new scheme worth Rs 3.03 lakh crore, including Rs 97,000 crore Central outlay.”

He said the funds would be given to power distribution companies (discoms) to strengthen their system.

Singh said the work of strengthening the system of discoms “is under process so far and the basic challenge is that we need to do back-end strengthening to commensurate with our expansion (of power sector) which is the main objective of this scheme”. 

He also said there is a difference between this scheme and earlier scheme as this fund allocation would be conditional.

All those discoms that are in losses would not be able to get funding under this scheme unless they make plan to reduce the loss trajectory, get it approved by the State and submit that to the Centre, the Minister said. Under the scheme, the target is to reduce aggregate technical and commercial (AT&C) loss to 12 per cent in the next five year, Singh said.

Currently, the AT&C losses are around 21 per cent, Singh added. He also said about the Government’s intention to bridge the gap between average cost of service (ACS) and aggregate revenue realised (ARR) for power supply.

The scheme envisages 25 crore smart meters, 10,000 feeders, four lakh km of low-tension overhead lines planned under the ongoing works under Central Government schemes.  Central schemes Integrated Power Development Scheme (IPDS), Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), and Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya) will be merged. The total allocation will be Rs 3,03,058 crore, including Central Government share of Rs 97,631 crore.              

And, the savings of their gross budgetary support (Rs 17,000 crore) would be part of the total outlay of the revamped distribution sector scheme under the existing terms and conditions till their sunset on March 31, 2022. 

The funds under these schemes would be available for the identified projects under IPDS and for the approved ongoing projects under the Prime Minister’s Development Program (PMDP) for J&K and Ladakh under IPDS and DDUGJY till March 31, 2023.