Saturday, June 25, 2022

Cabinet approves Rs 3.03 lakh crore revamped distribution sector scheme for DISCOMs

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  • The scheme will have an outlay of Rs 3,03,758 crore with an estimated Gross Budgetary Support (GBS) from the Central government of Rs 97,631 crore
  • The currently ongoing approved projects under IPDS, DDUGJY, along with PMDP-2015 for the J&K and Ladakh, would be subsumed in the Distribution Sector Scheme for DISCOMs

New Delhi: The Union Cabinet has given its approval to a revamped, reforms-based and results-linked Distribution Sector Scheme worth Rs 3.03 lakh crore for power distribution companies (DISCOMs) on Wednesday. The disbursement of funds under the scheme will be based on meeting pre-qualifying criteria and upon achievement of basic minimum benchmarks by DISCOMs evaluated on the basis of an agreed evaluation framework tied to financial improvements. The implementation of the scheme will be done through state-run Power Finance Corporation (PFC) and REC Ltd and would be based on the action plan worked out for each state rather than a “one-size-fits-all” approach, said an official statement.

“The scheme seeks to improve the operational efficiencies and financial sustainability of all DISCOMs/ Power Departments, excluding Private Sector DISCOMs, by providing conditional financial assistance to DISCOMs for strengthening of supply infrastructure,” said the statement. The scheme will have an outlay of Rs 3,03,758 crore with an estimated Gross Budgetary Support (GBS) from the Central government of Rs 97,631 crore. It would be available till the year 2025-26.

Discoms to reduce AT&C losses to 12-15%, ACS-ARR gap to zero by 2024-25

The scheme has set out ambitious goalposts for availing funds. According to the Ministry of Power, DISCOMs will be required to reduce AT&C losses to pan-India levels of 12-15 percent and cut the ACS-ARR gap (the gap between average cost of supply and realisable revenue) to zero by 2024-25, apart from improving the quality, reliability, and affordability of power supply to consumers. The scheme provides for annual appraisal of DISCOMs’ performances against predefined and agreed upon performance trajectories, including AT&C losses, ACS-ARR gaps, infrastructure upgrade performance, consumer services, hours of supply, corporate governance, etc.

DISCOMs will have to score a minimum of 60 percent marks and clear a minimum bar in respect to certain parameters to be able to be eligible for funding against the scheme in that year.

PM-KUSUM: Segregation of feeders

Placing major focus on improving electricity supply for farmers under the Pradhan Mantri Kisan Urja Suraksha Evem Utthan Mahabhiyan (PM-KUSUM) scheme, the new DISCOM reform plan also mandates segregation of feeders. Under the scheme, works of separation of 10,000 agriculture feeders would be taken up through an outlay of almost Rs 20,000 crore, which would be highly beneficial to farmers who would get access to dedicated agriculture feeders, providing them reliable and quality power. This scheme converges with the PM-KUSUM scheme, which aims to solarise all feeders, and provide avenues for additional income to farmers.


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25 crore smart meters to be installed by 2025-26

Another key feature of the scheme is to enable consumer empowerment by way of prepaid smart metering to be implemented in Public-Private-Partnership (PPP) mode. Smart meters would allow consumers to monitor their electricity consumption on a routine basis instead of monthly basis, which can help them in usage of electricity as per their own needs and in terms of the resources available. While in all 25 crore smart meters are planned to be installed during the scheme period, priority would be given to install prepaid smart meters in a mission mode in the first phase in all electricity divisions of 500 AMRUT cities, with AT&C losses greater than 15 percent. All Union Territories, MSMEs and industrial and commercial consumers, government offices at block level and other areas with high losses will also be prioritised for smart metering under the scheme. 

“It is proposed to install approximately 10 crore prepaid smart meters by December 2023 in the first phase. The progress of installation of prepaid smart meters would be monitored closely, especially those in government offices, to enable their installation in a time-bound manner,” said the statement. Along with the time-bound implementation of prepaid smart metering for consumers, system metering at feeder and distribution transformer (DT) level with communicating feature will also be taken up simultaneously in PPP mode.

Leveraging AI to make distribution sector ‘smart’

Artificial Intelligence (AI) would be leveraged to analyse data generated through IT/OT devices, including system meters, prepaid smart meters, to prepare system generated energy accounting reports every month to enable DISCOMs to take informed decisions on loss reduction, demand forecasting, Time of Day (ToD) tariff, Renewable Energy (RE) Integration and for other predictive analysis. “This would contribute a great deal towards enhancing operational efficiency and financial sustainability of the DISCOMs. Funds under the scheme would also be used for development of applications related to the use of Artificial Intelligence in the Distribution sector. This would promote the development of startups in the Distribution Sector across the country,” said the statement.

IPDS, DDUGJY, PMDP-2015 to be subsumed in Distribution Sector Scheme

The statement said that the currently ongoing approved projects under Integrated Power Development Scheme (IPDS), Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), along with Prime Minister’s Development Package (PMDP-2015) for the Union Territories of Jammu & Kashmir (J&K) and Ladakh, would be subsumed in the Distribution Sector Scheme. The savings of these schemes’ GBS (approximately 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 PMDP-2015 for the Union Territories of J&K and Ladakh under IPDS and DDUGJY till March 31, 2023.

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