State-run power distribution companies (discoms) will require to apply to the Union power ministry by December 31 to receive the Centre’s assistance under the recently approved Rs 3-lakh-crore revival scheme, power minister RK Singh said on Friday. As per the design of the scheme, loss-making discoms will have access to the Centre’s funds only after preparing a convincing programme for loss reduction, which has to be approved by the respective state governments.
Under the scheme to be implemented in the five years to FY26, the Centre will fork out Rs 97,631 crore. “Most states assured us that they will submit their proposals before October 31,” the minister said. He added: “We will provide assistance to states for strengthening and modernisation of systems so that distribution management systems, SCADA systems, smart grids and smart meters can be put in place. This will allow the whole distribution system to be controlled by artificial intelligence.” The idea is to address core issues of billing-collection inefficiencies and pilferage efficiently.
As FE reported earlier, as much as Rs 22,500 crore has been earmarked as the central government grant for the installation of 25 crore smart prepaid meters across the country. The total outlay for smart-metering under the scheme is Rs 1.5 lakh crore, of which the Centre will provide Rs 900 per meter to the discoms, which comes to around 15% of the cost of these devices. States which are able to install smart prepaid meters before December 2023 will also be eligible for an additional incentive of Rs 450 per meter.
The new scheme aims to bring down the aggregate technical and commercial losses (AT&C) — an indicator of pilferage — to 12-15% by FY25. AT&C losses now stand at 21%, after the UDAY scheme — which was launched in November 2015 to revive the loss-making, debt-ridden discoms — failed to meet the target of cutting them to 15% by FY19. The Centre has made funding under the new scheme contingent on the discoms committing to undertake structural reforms and infrastructure creation such as feeder separation and smart meters. The new programme will subsume the existing central government schemes for discoms such as the Integrated Power Development Scheme and the Deen Dayal Upadhyaya Gram Jyoti Yojana.
The minister had said earlier that losses of discoms were down 38% on year at around Rs 38,000 crore in FY20. The losses had surged 83% annually to Rs 61,360 crore in FY19, mainly due to delayed subsidy disbursal by state governments, inefficient billing and tariff collection and inadequate tariff hikes. Analysts expect the losses to have risen again in FY21, owing to the pandemic disrupting the reform process that induced a certain discipline among these entities.