CHENNAI: The Union Cabinet on Wednesday approved a Rs 3.03 lakh crore scheme aimed at improving the operational efficiency and financial sustainability of India’s leaky power distribution system.
Under this “reforms-based and result-linked” scheme, power distribution companies (discom) will be provided with financial assistance provided they meet pre-qualifying criteria and certain minimum benchmarks set on the basis of an evaluation framework that will focus on financial improvements.
An action plan is to be worked out for each state, instead of a one-size-fits-all approach, the Union Ministry of Power said.
Out of the total allocation, the Government of India’s share will be Rs 97,631 crore.
Addressing a press conference, Union Minister of Power R K Singh said that as far as strengthening discoms is concerned, “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”.
Among the top goals is to reduce Aggregate Technical & Commercial (AT&C) losses of discoms to 12-15 per cent by 2024-25.
AT&C losses span a wide range of heads including losses due to unpaid bills, power theft, distribution losses, etc.
The scheme will also focus on developing institutional capabilities for discoms and improving the “quality, reliability, and affordability” of power supply. The government’s UDAY website puts pan-India AT&C losses at 21.72%.
Key features include an annual appraisal of discom performance in parameters such as AT&C losses, infrastructure upgrade performance, consumer services, hours of supply, corporate governance, etc.
“Discoms have to score a minimum of 60% of marks and clear a minimum bar in respect to certain parameters to be eligible for funding in that year,” the ministry said.
Other schemes and projects in the space already in existence them will be subsumed under the new scheme, and their budgetary savings will be utilised.