VIJAYAWADA: Contrary to reports that claimed that the Centre has given a provision for the State governments to transfer the subsidy related to agricultural power directly into the accounts of power distribution companies (discoms), as is being followed now, the Union Ministry of Power had given the option to the States to either credit the subsidy in the accounts of the farmers that are either with banks or with Discoms.
The officials said that DBT of power subsidy was proposed in part for providing a borrowing leeway during the COVID-19 crisis, but is a also a critical part of the new tariff policy, which is pending with the Union Cabinet, and the Electricity (Amendment) Bill, 2020, likely to be introduced in the upcoming Parliament session.
At the conference of power and renewable energy ministers of all States held in July, the Union Ministry of Power discussed the reservations of the States to implement the proposed Bill. “On subsidy through DBT mechanism, some States were of the opinion that this may have implementation issues, recovery challenges, and add to costs.
It was informed by the Ministry of Power that keeping in mind the implementation difficulties it has been provided that the DBT can be implemented by transferring the subsidy to the account of the consumer either in the bank or in the Discom,” the ministry said, according to the approved minutes of the meeting.
“It was explained that many State governments do not release timely subsidy to the Discoms, thereby creating liquidity stress in the entire value chain of the power sector.
The DBT in electricity will improve energy accounting and ensure that the Discoms get paid for the electricity supplied to the consumers while allowing the State governments to give any quantum of subsidy they want to whichever section they want to,” the ministry further said on July 3, according to the minutes of the meeting.
The State officials maintained that DBT would most likely be made mandatory. “Either under the performance-linked borrowing freedom or the amended Act (if passed), the DBT would be made mandatory. This was proposed during the first term of the NDA. In fact, metering of all power connections, especially the subsidised connections, and DBT were proposed as reforms in the national draft energy policy compiled by the Niti Aayog in 2017,” a senior official explained.
The Niti Aayog, in its draft policy, noted that “adoption of DBT will meet the twin goals of curbing wasteful consumption and also deliver subsidy to the meritorious efficiently”.The State officials further sought to clarify that metering, which is a mammoth task as there are 17.55 lakh agricultural connections and over a lakh more unauthorised ones, would not restrict farmers from seeking subsidised accounts.
“We are going to pay for all the units used by the farmers.
So, there is no scope for apprehensions that their consumption would be affected. In fact, it will help the discoms to efficiently manage their supply by plugging the gaps. So, more farmers could stand to benefit as pilferages will be plugged and unauthorised connections would be regularised,” an official noted. The September 1 order of the State government to introduce DBT in one district (Srikakulam) before December this year was in accordance with the Union Finance Ministry’s letter dated May 17, through which performance-linked initiatives including giving the States an opportunity to additionally borrow 0.25 per cent of its GDP were announced.
Of the 0.25 per cent of GDP borrowing linked to power sector reforms, the States can avail 0.15 per cent if they roll out the DBT to all farmers at least in one district by December 31, 2020, 0.05 per cent each if they reduce discoms’ aggregate technical and commercial losses and the gap between average cost of supply and average revenue realisation. Based on the performance of the above three parameters, the power ministry will facilitate additional borrowing by Jan 31, 2021.